At first, it appeared as if the CEO leadership panel at the annual meeting of the Risk and Insurance Management Society Inc. on May 1 would proceed as a routine luncheon with insurance company and broker CEOs singing their own praises and expertly dodging questions posed by audience members via moderators.
But then the panel was faced with the difficult question of what's to be done about the latest version of contingent commissions: supplemental payments.
Brian Storms, chairman and CEO of Marsh, broke the ice with a joke, saying "some of us were going to ask Joe about that, but I don't see him here," referring to Joseph Plumeri, chairman and CEO of Willis Group Holdings. Plumeri, who declined to participate at the last minute, has forbidden brokers from accepting the supplemental payments.
Storms ended his comments by saying the issue is not reserved just to brokers, but that it is a much broader problem and that Marsh would be taking its time with coming up with a solution that would be good for the industry, the company and its clients.
Even Storms' archcompetitor, Gregory Case, president and CEO of Aon Corp., disappointed and called for a truce with Storms, with whom he bickered at the 2006 conference. Case recognized Storms' "very good points" and said he wanted to "go on record as agreeing" with him. What's needed, said Case, is a candid dialogue between brokers and their clients, so that, among other reasons, "we can help you understand the value we provide."
J. Patrick Gallagher, president and CEO of Arthur J. Gallagher & Co., said he wanted to clear the air after a recent article "made me sound cavalier about supplemental commissions." Gallagher praised his company and his colleagues for their commitment to transparency on the issue, saying it "really is a huge change" over the last several months, but hinting that it was "interesting" that only four brokers have been able to take that position.
Evan Greenberg, president and CEO of ACE Ltd., didn't seem impressed with the brokers' responses. "Transparency doesn't eliminate the problem," he said. Applause from the audience followed his next comment that there is an inherent conflict of interest in supplemental payments and brokers are supposed to work for their clients.
When pressed further on the topic of commissions, the discussion heated up.
The line between the front row comprised of brokers--Storms, Case and Gallagher--and the back row comprised of carrier execs--Greenberg, Martin J. Sullivan, president and CEO of AIG, Shivan Subramaniam, chairman and CEO of FM Global, and John Amore, CEO of general insurance at Zurich--became sharp and clear.
Moderator and former RIMS president Ronald W. Stasch pushed pressed further still after he said audience members submitted complaints that he had let the panel off the hook on the topic of contingent commissions earlier in the discussion.
Greenberg immediately chimed in, saying "I think that's a question that the guys in the front row have to address." He added that the insurers want to get their premiums from the brokers as soon as possible.
"And we want to get our policies written as soon as possible," Storms fired back.
Case and Gallagher remained on the sidelines, with Case saying that if an Aon client was behind the audience complaint "fantastic, let's talk about it." Gallagher said "in a transparent world, our terms of trade should be your terms of trade."
Wrapping up the discussion, Storms admitted that contingent commissions are an issue that couldn't be solved that day, but that the panel would provide "great media sound bites" to make for "interesting fodder" in the press.
And so they have.
June 1, 2007
Copyright 2007© LRP Publications