Senior insurers have reacted angrily this week over national broker moves to charge additional commissions.
The backlash follows the new remuneration models introduced by Marsh and Willis. They are planning to introduce a 2.5% commission on certain business lines. Aon has been doing this for some time.
Some insurers are unhappy because they feel they are powerless to stop the brokers implementing the charges.
One senior insurer said: “Our problem is that because we rely on the big brokers for such a large percentage of our business, we can’t say no.
“Brokers get braver and put up their commissions in softer markets. It distorts the market, but there’s nothing we can do about it.”
Another senior insurer was also unconvinced. He said: “When a broker says they’re introducing a new charge, it says to me ‘you need more than the others because you’re less efficient’.”
Marsh introduced its new charge on 1 October. It differs from Aon’s because Marsh is charging on all business, not just fee-based business.
A market source said: “If [Marsh] is already getting serious push-back on the fee-based business, which seems to be the case, then as far as commission-based business is concerned, hell’s weather forecasters will be keeping a close eye out for snowballs.”
A spokesperson for Marsh said: “We are pleased with the supportive response we have on this from both the market and from clients.”
‘ See News Analysis, page 10