Remuneration dispute grows as Marsh questions services in future

Major Lloyd's brokers and underwriters have hit deadlock over broker remuneration packages, the Lloyd's Market Association admitted.

LMA head of underwriting and claims Bill Rendall said the 1% flat fee proposed by Heath Lambert and the 0.75% fee put forward by Marsh had yet to be endorsed by insurers.

Rendall also rejected suggestions that the LMA was involved in negotiating an agreement between underwriters and the brokers, saying it was up to individual members to endorse the proposed fees.

"We are not involved in discussing whether the numbers are right. It is an individual issue for our members to discuss."

He said the LMA's working party headed by Andrew Beazley has been established to look into the broker model and dispel practices which could lead to a conflict of interest - despite a widespread perception that the group was looking at the detail of the fee proposals.

It prioritised installing a culture of transparency in the broker model, and moving the commission from the

"backend to the front end" to change the relationship between the broker and underwriter, he added.

The admission came as Marsh said it would not rule out abandoning its administration services to underwriters owing to difficulties in negotiating fees for the work.

Marsh UK retail chief executive Toby Foster said negotiations with underwriters over remuneration was a "daily occurrence".

But he did not rule out abandoning administration services in the future.

"It may not be feasible," he said.

The chairman of Heath Lambert's project risks group, Graham Barr said it has received positive feedback on its flat fee. Bar said that Heath Lambert and the LMA were aiming for the "same goal but had used different methods to achieve it".