ZURICH (Bloomberg)—Contingent commissions, the once-banned payments that insurers pay to entice brokers, create a conflict of interest and ought not to become prevalent again, ACE Ltd. CEO Evan Greenberg said.

Aon Corp. last week said it is considering bringing back the once-hidden payments that insurers pay to supplement the fees it takes from the buyers of coverage. Marsh & McLennan Cos. Inc. said in March it will take contingent commissions at its unit serving mid-size U.S. clients.

“If customers tolerate the practice of contingents, their use over time will likely become more prevalent,” Mr. Greenberg said on a conference call with investors Wednesday. “Frankly, I hope that does not occur.”

ACE, based in Zurich, is a provider of commercial liability and property/casualty insurance.

Regulators in New York, Connecticut and Illinois in February released Aon, Marsh and fellow insurance broker Willis Group Holdings P.L.C. from a ban on accepting contingent commissions. The ban resulted from a 2005 probe by former New York Attorney General Eliot Spitzer.

Brokers are supposed to find the best insurance policies for clients, so the insurance companies' payments to the brokers to direct business to them were a conflict of interest, Mr. Spitzer alleged at the time. He negotiated a ban on the practice to settle investigations of fraud and anticompetitive practices.

Following the states' February lifting of the ban, brokers now must reveal the contingent fees if clients ask.

“Unlike agents who represent insurance companies, brokers represent their clients,” the purchasers of the insurance coverage, Mr. Greenberg said on the conference call. “In fact, if I had it my way, clients and not insurers would compensate brokers. But that's just not a reality.”

Aon, based in Chicago, and New York-based Marsh & McLennan appealed to officials for redress in 2008 as regulators opened a review. London-based Willis said it won't take contingents and called Aon's stance last week “troublesome and ambiguous.”

Regulators probably can’t handle reform: Greenberg

In additional comments Wednesday, Mr. Greenberg said he doubts the biggest rewrite of financial rules since the Great Depression will halt industry excess because regulators botched their jobs in the credit crunch.

“When I look back on the crisis and think about the role that current regulators played or didn’t play in recognizing accumulations of risk and bad underwriting in the credit business, it doesn’t give me a whole lot of encouragement about how regulators will behave in the future,” Mr. Greenberg said.

President Barack Obama last week signed reforms designed to prevent a repeat of the risk-taking that brought the financial system to the brink of collapse and triggered the bailout of firms including ACE’s competitor, American International Group Inc.

Mr. Greenberg kept Zurich-based ACE profitable throughout the crisis by avoiding the mortgage-related investments and derivative trades that hobbled AIG.

“It’s one thing to write a set of regulations and to have a regulator put in place to administer,” said Mr. Greenberg, 55. “It’s another thing to see regulation administered in a vigorous, thoughtful and insightful way.”

Mr. Greenberg was an executive until 2000 at New York-based AIG, where his father, Maurice R. Greenberg, was CEO until 2005. ACE announced Evan Greenberg’s hiring in 2001.

Evan Greenberg said in 2008, after the AIG rescue, that he was “adamantly opposed” to the U.S. including insurers in its program to prop up ailing financial companies.

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