When the rich stream of contingent commissions ran dry for the major international brokers the drawing boards were undoubtedly dragged out in an attempt to find ways of clawing back millions in lost earnings.
Marsh, Aon, Willis and Arthur J Gallagher all pledged to abandon charging these commissions in the wake of the investigation by the then New York attorney general, Eliot Spitzer. And now they are looking at ways to top up the balance sheets using a variety of new vehicles.
Last year, Gallagher Re unveiled a deal with the New York Mercantile Exchange (NYMEX), whereby the exchange would trade property damage risk exposures. It is intended to facilitate the introduction of new capacity into the market.
And last week Marsh launched a reinsurance sidecar for the property catastrophe market. The new vehicle backed by Ace is thought to be the first of its kind from a broker.
But how profitable are sidecar arrangements? Although experts agree that any market savvy company with capital available will be looking to take advantage of exceptional conditions in this way, there is some doubt that this method is a long-term revenue stream.
"The ability to set up quickly on a relatively low cost base will be attractive," says one London broker. "But I'm not sure this is a replacement for contingent commissions as the trend may last only while rates are high."
In the short-term, brokers can certainly expect to make money out of transactions such as these, if they're willing to go through the arduous task of setting one up.
As one Lloyd's player points out: "The options are endless. It is very interesting to see the way in which the capital market has begun to engage with the insurance market, which hasn't happened before.
"It is all about protecting the balance sheet by using someone else's money. We have to look at different ways of doing that." IT