A senior executive with leading broker Marsh said he sees no conflict in brokers being compensated by the insurers they place business with in spite of their primary mandate being to represent the interests of the buyer.

Whether or not there should be a change in the way insurance brokers are compensated was front and centre during yesterday morning?s sessions at the World Insurance Forum, which included opening remarks and a subsequent panel discussion of risk managers and brokers.

Comments on the matter follow the spotlight being turned on how insurance brokers are paid for their services after New York attorney general Eliot Spitzer subpoenaed a number of broking firms last month for information on how they are paid.

The actions were taken by Mr. Spitzer following similar probes of the mutual fund industry. Mr. Spitzer?s latest move, which has been said by some in the sector to be ?politically motivated?, aims to look into whether or not there is a conflict of interest in insurance brokers receiving payments from insurance companies placing business with them while buyers depend on brokers to give unbiased advice.

Senior advisor to Marsh & McLennan John Sinnott said in opening remarks made yesterday before a panel discussion of brokers and risk managers kicked off, said he saw no conflict of interest in brokers being paid by the insurer.

Mr. Sinnott, who veered away from speaking directly to the situation at Marsh and saying he would stick to speaking to the subject in ?general terms?, said payment methods for brokers had changed through the years and during that time greater transparency had been put in place around remuneration. But he said that brokers, as distributors of a product, are right to be benefited by the insurer, not the insured. ?Something that has not changed in my 41 years in the business, and that is the label that insurers give brokers ? producer.?

He added that was an apt title as brokers produce the opportunity for clients to be shown a product, which pave the way for insurers to underwrite the risk. ?There is absolutely no conflict here,? he said, of brokers being compensated by the carrier when they were acting as an intermediary and ultimately the advocate and advisor for the buyer. Although standing behind the way brokers are compensated, Mr. Sinnott also said he was supportive of greater disclosure regulations being faced by that part of the sector.

?Today we are looking to fine tune our transparency,? he said.

During questions from the audience that followed the panel discussion, the subject continued to raise its head with an audience member asking if brokers being paid on commission basis might one day be struck and end in clients paying for the services they receive from brokers.

Although some said it could eventually come to that, there would be ?structural? hurdles to cross in changing the way brokers were compensated.

Ellen Vinck, a long-time risk manager based in San Diego with the United States Marine Repair Inc., a company which relies heavily on defence contracts as well as some commercial work, said she was not adverse to the system shifting to the client paying the brokers fees.

Ms Vinck, who said she places business for United States Marine Repair through Aon in New York and professing to be happy with the service she gets, said she would not mind directly paying for that.

?I am not adverse to directly paying the broker to be my advocate if it is decided that this remuneration system is to be abolished.?

Earlier, during the panel discussion, she said she saw the buyer, in a way, as already paying the broker?s compensation as the client pays the premiums, which is ultimately the funds from which brokers are compensated by the carrier.

She added that whatever way this went brokers needed to ?do a better job of advising insureds how they are compensated?.

One question to arise from the discussion was how brokers, if they were to move to billing their services directly to clients, would evaluate and charge for a host of tasks performed.

Mario Vitale, CEO of Willis North America, said he felt that brokers had not done a good enough job of conveying to clients the value of their services.

Throughout the morning?s discussions, Mr. Vitale and Peter Garvey, president and CEO of the North American operations of Marsh Inc., who was also participating in the panel discussion, said that the level of services that brokers perform on behalf of clients has increased through the years and now includes, for example, frims having their own departments set up to analyse the financial stability of the insurers they may be placing business with.

Mr. Sinnott concluded that one should understand that brokers were not only dealing with large public corporations, but also private clients and mid-size companies, and that each had different requirements.

He said the way brokers were being paid by the market had gradually changed through the years but predicted it was unlikely that there ever would be a ?one size fits all? solution.