Plumeri, Calling for Compensation Change, Derides New York's Regulations

NEW YORK, Jul 14, 2008 (A. M. Best via COMTEX) -- WSH | Quote | Chart | News | PowerRating -- Joseph Plumeri, chief executive of Willis Group Holdings, said he is heartened that New York officials are reopening the broker compensation issue and calls the current, two-tier regulation regime "nuts."

?I?m heartened that there are some hearings in New York ? to talk about it. Because this is where the unlevel playing field was created,? he said in an interview prior to the first of three public hearings in New York on July 14, in Buffalo.

?I certainly think everybody should be transparent, and I strongly believe there should be a level playing field,? Plumeri said. ?It?s just crazy now. I mean, I just don?t understand what Spitzer did ? three people can?t take them, and the whole industry can pay them. It?s just nuts.?

Willis and the two largest brokers in the world, Aon Corp. and Marsh & McLennan Cos., entered into a settlement with New York officials in 2005 to end investigations into alleged business steering and other compensation issues that began in 2004 under New York?s then-attorney general and now former governor, Eliot Spitzer.

The terms, which applied only to the brokers in the settlements, included eliminating contingents and disclosing to clients and receiving client approval for all compensation.

Plumeri said that, at a minimum, the state should mandate transparency in client dealings by all brokers and agents, making them subject to the same requirement.

?We?re dealing with people?s money, we?re dealing with their balance sheets, we?re dealing with their assets,? he said. ?We?re trying to protect their assets. And they need to know how we get paid, and that the payment isn?t conflicted. So, above all, the transparency issue?s got to be fixed. At least that?s an attempt to level the playing field.?

Asked if New York officials should ease the regulations on Willis and the other two brokers, or expand those regulations to all other brokers and agencies, Plumeri said, ?I think they should make it a level playing field. And for me, I think everybody should not take contingents.?

?I think transparency should be the guideline, the rule of law, around the world,? he said, adding that he ordered Willis to adopt disclosure rules internally in 2004, prior to the settlements, ?and we were transparent around the world in July of ?05 ? in every country.?

Two more hearings are scheduled, on July 23 in Albany and July 25 in Manhattan, and all will be webcast live. The hearings are being conducted by the state's insurance department and attorney general's office.

According to the Best?s Review ranking of global brokers, Aon is the world?s largest broker based on 2007 brokerage revenue, MMC is second and Willis third.

(By Alyn Ackermann, senior associate editor, BestWeek: Alyn.Ackermann@ambest.com)

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