NEW YORK (Bloomberg) - Aon Corp. said the insurance carrier-funded payments it was banned from accepting three years ago do not necessarily harm clients if properly disclosed.

"Aon does not believe that such compensation poses an irreconcilable conflict of interest," Stephen McGill, chief executive officer of Aon's risk services unit, said in testimony posted on the New York Department of Insurance website. "Full industry transparency and consent is the best protection against the potential conflicts of interest."

Aon, the world's biggest insurance broker; No.2 Marsh & McLennan Cos. and No.3 Willis Group Holdings Ltd. agreed in 2005 to stop taking payments known as contingent commissions from insurers as part of settlements with then-New York Attorney General Eliot Spitzer. The ban, conceived following Mr. Spitzer's campaign against industry kick-backs, was never extended to all brokers, and the insurance department is now considering changes to the regulation.

"We do not expect contingent commissions to come back for global brokers," Citigroup Inc. analyst Keith Walsh said on Thursday in a research note. "However, we do look for enhanced disclosure requirements for smaller brokers."

Aon's position is at odds with Willis's July 14 appeal to do away with contingent commissions at all brokers. The three companies are seeking a regulatory environment in which the same rules on compensation apply to all. David Rahill, a partner at Marsh & McLennan's Mercer Health and Benefits, said on July 23 that the broker has lost business and staff to smaller competitors because of the ban.

"The unlevel playing field has clearly hurt Marsh," Daniel Glaser, CEO of Marsh & McLennan's flagship brokerage, said in prepared testimony yesterday. "Policyholders are harmed by this because they cannot make a fair comparison."

Brokers help businesses shop for coverage and typically receive a percentage of the policy sale as compensation.

Mr. Spitzer negotiated the ban on contingent commissions through settlement agreements with Aon, Marsh & McLennan and Willis to prevent brokers from steering clients to insurance providers that pay secret fees. The three companies agreed to pay more than $1 billion to resolve Mr. Spitzer's allegations of fraud and anti-competitive practices in the placing of insurance policies.

"It is laughable when a mega-broker such as the Willis Group says that the insurance brokerage playing field is not level," Peter Resnick, president of the Council of Insurance Brokers of Greater New York, said. "If it now operates at a competitive disadvantage, it is solely due to its own misdeeds!"