Plumeri touts need for innovation in industry

The insurance industry should take recent controversy over broker compensation and use it as an opportunity for “healthy self-examination”, Willis Group CEO and chairman Joe Plumeri told an audience at the RIMS Conference in Philadelphia Monday.
Plumeri says the industry needs to develop a new business model based on transparency, innovation, and client advocacy. Willis was the first brokerage to discontinue accepting contingent commissions when they came under investigation by New York Attorney General Eliot Spitzer last year, and Plumeri says all brokers should follow this lead. He says such commissions are “inconsistent with the principle of client advocacy”, stressing, “it must be 100% clear who the broker works for”. As such, payments should come from the client, a system he says will make brokers more valuable and encourage them to work harder for their fees.
In the same vein, he adds, the industry must address the issues of contract certainty and more efficient claims payment to better serve its clients and avoid insurance becoming a commodity.
The industry’s new business model should include tighter internal controls and disclosure standards, and an emphasis on delivering solutions, not just products.