âRIMS is pleased that Marsh has joined other large brokers in agreeing not to accept contingent commissions.Â We call on all brokers to make the same commitment to their customers,â says Terry Fleming, president of RIMS and director, division of risk management for Montgomery County, Maryland. âFurther, we call on the insurance industry to develop alternative forms of compensation that do not place the broker in the position of a conflict of interest in the insurance purchase transaction.â
The Risk and Insurance Management Society, Inc. (RIMS) has always maintained the position that contingent commissions should be universally banned and views Marshâs intentions as a positive step forward with regard to its U.S clients served by its core broking operations. RIMS is pleased by Marshâs decision to refrain from accepting contingent commissions for services rendered by its core broking operations, as well as its pledge to practice transparency regarding its brokerage compensation.
RIMS maintains that contingent commissions impose an inherent conflict of interest upon the insurance buying transaction, regardless of the nature of the client or the intermediary. Contingent commissions also impact pricing, as fees are passed along to the consumer. RIMS urges Marsh to adopt a global ban on such commissions. Â
RIMS recognizes that many of its members regard enhanced commissions and contingent commissions as one in the same. To that end, RIMS acknowledges Marshâs efforts to collect enhanced commissions on a flat fee, rather than a volume basis, and it encourages Marsh, its carrier partners and its clients to continue having open and frank discourse over the nature of such compensation, how it is collected and disclosed.
RIMS will continue to work closely with all parties on the issues of producer compensation and disclosure.Â Â Â Â