Position Document From Conner Strong & Buckelew on the New Jersey Comptroller's Report on the DRPA

PHILADELPHIA, PA--(Marketwire - Mar 29, 2012) - Commerce Insurance Services, now known as Conner Strong & Buckelew (Commerce), would like to acknowledge the Office of the State Comptroller's findings in its investigation of the Delaware River Port Authority that Commerce's actions were entirely legal and in accord with all laws and regulations governing insurance brokerage firms.

Commerce commends the important work of the Comptroller in reviewing areas in which public dollars may be saved or put to better use. However, given the unique facts of this matter, along with the most recent pronouncements of the New Jersey Department of Banking and Insurance, Commerce respectfully disagrees with the Comptroller's observation that the DRPA lost the opportunity for savings years ago by negotiating insurance commissions. Specifically, New Jersey law and regulations did not, and do not, permit the DRPA to negotiate lower commissions with its insurance brokers. As a result, any payment to Commerce by Willis -- regardless of the purpose -- had zero impact on the DRPA's commission rates or amounts. Furthermore, Commerce and Willis had a marketing agreement, not a commission arrangement.

The relationship between Willis, the third largest insurance broker in the world, and Commerce Insurance Services came about when Joseph Plumeri, Chairman and CEO of Willis, joined the Board of Directors of Commerce Bank on November 19, 2003. After Mr. Plumeri joined the Board, Willis and Commerce entered into a marketing agreement, almost two years after Willis had become the New Jersey broker for the DRPA. It was not until 2005, at least two years after having been appointed the DRPA's insurance broker, that Willis first made a marketing agreement payment to Commerce. Even though Willis remains the New Jersey DRPA insurance broker today, Willis has not made a marketing payment to Commerce or its successor companies since 2009.

As the Comptroller's report acknowledges, the investigation has found nothing illegal, unethical, improper or in violation of any laws, statutes or regulations regarding Commerce, Mr. Norcross, Mr. Buckelew or anyone associated with any of them or the agreement between Willis and Commerce.

Willis was first appointed New Jersey insurance broker for the DRPA in January 2003. It continues to hold that position today. Willis is paid an industry standard commission for the work it does by the DRPA. New Jersey law, N.J.S.A. 17:29A-15, explicitly prohibits brokers, such as Willis, from offering a reduced commission or rebate for a reduced insurance rate. Under the compensation structure Willis has with the DRPA, Willis could not have lawfully reduced its industry standard commission rate. This fact is underscored by the New Jersey Department of Banking and Insurance Bulletin No. 11-22 issued by Commissioner Thomas B. Considine on October 21, 2011 reaffirming the prohibition of rebating commissions.

In addition, the relevant timeline unequivocally demonstrates that any payments from Willis to Commerce had no impact on the commissions paid by DRPA to Willis. At the time that Willis was retained by the DRPA in January 2003 and provided insurance premium prices to the DRPA, Willis did not have any agreement to pay any fee to Commerce. In fact, Willis did not even know that it would be paying a fee in the future to Commerce. Commerce did not receive its first payment from Willis until two years after Willis had been broker for the DRPA. Willis never increased the cost of premiums to the DRPA to account for any payment to Commerce. Although Willis continues to be the broker for the DRPA, it stopped making any payments to Commerce in 2009. After it stopped making the payments, Willis did not decrease the premiums paid by the DRPA.

The timeline also demonstrates that there was a marketing agreement between Willis and Commerce. If the payments had been commissions, then Commerce would have received them from 2003, when Willis became the broker for DRPA. Commerce would also be receiving the payments to this very day as Willis remains the broker for the DRPA. Willis stopped making the marketing payments to Commerce well before the current review by the Comptroller. In addition, to receive a commission, Commerce would have had to secure the DRPA account for Willis. Additionally, as Joseph Plumeri, Chairman and CEO of Willis testified before the Comptroller's Office, no one from Commerce Insurance Services assisted with or was involved with the appointment of Willis to the DRPA.

Neither Commerce nor any of its successor companies have had any relationship with Willis since October 2009. In fact, in recent years, Commerce's successor companies have been in direct competition with Willis, including competition for the DRPA insurance brokerage services work. Commerce's successor company, Conner Strong & Buckelew, has, in fact, responded to the first public procurement of insurance brokerage services issued by the DRPA in 2010 and again in 2011. Conner Strong & Buckelew anxiously awaits for the public procurement process to be completed now that the Comptroller's report has been issued and competitively bid contracts may be awarded.