Aon Corp., the big Chicago insurance broker, has announced that it would stop accepting contingent commissions from insurance companies.
The move came Friday, about a week after New York Attorney General Eliot Spitzer unveiled a lawsuit against the practice that targeted Aon's main competitor, Marsh & McLennan Corp.
Contingent commissions are compensation arrangements linked to volume or profit criteria, not any specific service. The practice of paying contingent commissions developed over several decades as a means of compensating insurance intermediaries for services on behalf of insurers, Aon explained in a press release.
The company said that it will provide more detail on contingent commissions and other compensation for services to underwriters in its third-quarter earnings report and conference call on Friday.
Aon has begun winding down contingent commission agreements and expects to complete this by Dec. 31.
