Underwriters' pressure forces broker to backtrack on fees
Aon has bowed to market pressure and slashed its proposed service fee charges for London underwriters, according to market sources.
The broker is understood to have agreed to charge a 2% flat fee on all work supplied for insurers.
This marks a major shift from the original suggestion that charges of up to 5% could be slammed on insurers.
Sources said intense negotiations between Aon and the Lloyd's Market Association, led by Beazley chief executive Andrew Beazley, had finally closed after weeks of intense discussion.
A formal announcement on broker service fees is expected imminently, said the sources.
Aon and the LMA declined to comment. Aon's move is likely to put pressure on Marsh, which is currently developing its new business model and could cause it to review its proposed service fee arrangements.
At the end of March, Heath Lambert announced its own service fee charges for insurers - a flat rate of 1%.
Market sources predicted that it would be difficult for Marsh to achieve more than a 2% service fee charge and might even be pushed down towards 1%.
Marsh declined to comment.