The “contingent commissions” controversy boiling around US brokers doesn’t have application here, says the National Insurance Brokers Association (NIBA). CEO Noel Pettersen says Australian brokers are tightly regulated in all their arrangements with insurers and clients, and there is no comparison with the US situation.

New York Attorney-General Eliot Spitzer alleges staff of mega-broker Marsh Inc have rigged bidding and overcharged clients to secure contingent commissions from insurance companies. The broker is alleged to have gained $US1.2 billion in the past 18 months from such payments.

In New York, Jeffrey Greenberg resigned today as CEO of Marsh & McLennan (see International News).

The storm over contingent commissions is also spreading to Aon, where a San Diego law firm is trying to raise a class action against the group alleging it also received the commissions from insurers. Aon has already announced that it will cease the practice.

NIBA CEO Noel Pettersen says it is fundamental to the role of brokers that they seek the best possible insurance arrangement for the client.

He says NIBA and its members support transparency in the insurance transaction. “Disclosure of financial arrangements is required by law and the NIBA code of conduct, which benefits clients and the industry.”

The Australian Securities and Investments Commission says remuneration agreements should always be adequately disclosed, and market or placement services agreements should provide sufficient disclosure. However, the regulator says “it is clear that the laws concerning this are not the same here as they are in the US”.