A majority of commercial insurance buyers think contingent commissions represent a conflict of interest for brokers, and an even larger proportion think disclosure of commission payments by insurers to brokers should be mandatory, according to a survey.

The survey comes as the debate over the disclosure of commission payments continues to generate controversy, New York state's planned 2011 introduction of disclosure rules and failed attempts by prosecutors to secure convictions against individual brokers for their alleged roles in abusing contingent payments.

Business Insurance surveyed commercial insurance buyers this month on their views on insurance industry compensation practices.

The online survey found that 70.1% of buyers think contingent commissions paid to brokers represent a conflict of interests, 18.1% said the payments do not represent a conflict of interests and 11.8% said they were not sure.

In addition, 95.4% of respondents said disclosure of commission payments by insurers to brokers should be mandatory. Some 86.8% of respondents said they already require full disclosure of all compensation by brokers on their accounts.

According to the survey, 71.4% of buyers think their brokers' compensation structure is sufficiently clear, while 67.9% said they would prefer to compensate their brokers only through fees.

The payment of contingent commissions and disclosure of broker compensation continues to generate controversy.

The practice of insurers paying contingent commissions to brokers has been controversial for more than a decade. The issue came to a head in 2004 when former New York Attorney General Eliot Spitzer brought charges of client-steering and bid-rigging by brokers seeking to maximize contingent commission payments.

The allegations resulted in settlements by the largest brokers and a ban on their collecting contingent commissions. That ban was lifted this year, though the three largest brokerages—Marsh & McLennan Cos. Inc., Aon Corp. and Willis Group Holdings P.L.C.—say they still will largely refrain from collecting the payments. Many smaller brokers continue to collect contingent commissions.

Efforts to prosecute individual brokers for their involvement in bid-rigging and client-steering schemes have largely been unsuccessful. In the most high-profile case involving former Marsh executives William Gilman and Edward J. McNenney, the judge in the case, citing new evidence, this month overturned the executives' convictions.

Disclosing broker compensation also has caused controversy.

The Risk & Insurance Management Society Inc. has pushed for mandatory disclosure of broker compensation, but New York insurance authorities this year published broker disclosure requirements that were considerably watered down from previous drafts to require extensive disclosure only on the request of clients. The rules are to go into effect on Jan. 1, 2011.

A total of 221 commercial insurance buyers responded to the Business Insurance survey.

Of the respondents, 56.4% worked for companies with more than $1 billion in annual revenues, 15.5% for companies with between $500 million and $1 billion in revenues, 17.7% for companies with $100 million to $499 million in revenues, and 10.5% for companies with less than $100 million in revenues.