Bob Graham, Executive Editor

Don Bailey, CEO of Willis North America, had a simple message for insurance regulators in New York looking at broker compensation and contingent commissions: Eliminate them for everyone. Bailey’s testimony on the topic featured a well-reasoned call for the termination of all contingent commissions in New York within three years. According to an IFAwebnews.com article, Bailey even gave two suggestions for how to do it: Force agents who register for licenses to stop taking them or challenge the insurance industry to resolve its own problem. The first one makes sense; the second one seems unlikely to lead to a quick resolution, although it would be fun to watch.

Bailey asked New York Insurance Superintendent Eric Dinallo and representatives of the New York attorney general’s office to create a “level playing field” because Willis – and probably the three other major insurance brokerages that settled issues in New York over paying contingent claims – is at an “unfair disadvantage.” Of course, if you flash back a few years, prior to then New York Attorney General Eliot Spitzer’s investigation that led to the settlements and now the hearings about contingent commissions, many of Willis’ competitors would have argued that Willis had an unfair advantage. The playing field for Willis’ competitors then was as uneven as it probably seems now to Willis and the others who settled claims about contingent commissions in New York.

Ending contingent commissions is the right move. What remains to be seen is how best to do it and how long it will take afterward for another brokerage to claim that the playing field is once again uneven.