Broker commissions remain at the top of the issues list for the US insurance industry, with the Risk & Insurance Management Society (RIMS) saying it supports a business model for the industry that does not provide, offer or make available any contingent commissions to brokers.

In a statement on industry compensation and placement practices, the New York-based group says many brokers pledged to refuse placement payments from insurers when they represent the buyer.

“RIMS applauded this action and supported the prohibition on the use of placement service agreements or other similar arrangements for the entire broker industry,” it said.

“We are disappointed to learn that some brokers are apparently reconsidering their pledge to refuse to accept these fees.”

RIMS says it recognises that contingent commissions are currently paid on agency-generated business, when the agent represents the insurer rather than the buyer.

“Such practices have always existed in the insurance markets. However, for brokers and independent agents to accept these fees in transactions that are made on behalf of the buyer represents an inherent conflict of interest.”

RIMS says investigations, admissions and fines demonstrate how these practices can be manipulated to the disadvantage of the insurance buyer.

It says many smaller, regional or privately held brokerage firms are not part of the various investigations and settlement agreements and have continued to utilise placement service agreements and contingent compensation arrangements.

“RIMS supports the prohibition of these compensation arrangements for any broker or agent acting on behalf of a buyer.”