RIMS takes position on broker contingency fees

Canadian Underwriter, September, 2004 by Anonymous

The organization representing North American commercial insurance buyers has not come out against broker contingent commissions, but is issuing strong words on the need for full disclosure of such arrangements. In its policy statement on compensation agreements, the Risk and Insurance Management Society (RIMS) says, "because of the complex nature of insurance transactions, a special trust relationship built on a foundation of truth and honesty must exist between broker and client...disclosure of agreements and relationships with insurers is an important part of the integrity of this relationship."

Contingency fees - commissions which are based on factors other than a percentage of premium, such as the profitability of a book of business to the carrier - have come under fire...