Allianz has blamed world-leading brokers Marsh and Aon for the massive losses insurers are making in the global corporate risks business.
Board-level global risks chief Dr Alfred Gossner slated Marsh and Aon for demanding bigger and bigger discounts for bringing larger books of business. He claimed the "duopoly" had done more damage than when there were five big competing brokers. Gossner said the pair accounted for 80% of the broking business for such risks.
"The intensity of the competition goes far beyond the balanced situation when we had five such brokers," Gossner said. "They have used their client base to demand bigger discounts. Today's premium levels are insufficient to cover average claims."
And he pinned the bulk of blame on the two giant brokers. "They have played a major role. They have contributed to the reduction in premium levels."
Gossner said Allianz had been forced to reduce its premium levels during the downward cycle or face losing swathes of contracts. But he claimed Allianz had not been an aggressive price cutter and the firm had been the first to stand up to the brokers and demand changes. "I don't think that we have been the most aggressive in the recent cycle. But we were one of the first to start raising our prices and the others have followed," he said.
Doug Pennycuick, broker executive with Allianz Cornhill, confirmed that UK insurers had been giving the big three in the UK (Willis also) a talking to. "Prices have changed and covers have changed. Some covers that were available last year are not available now. Insurers are having a series of very interesting conversations with the three brokers in the UK and at the same time having some very interesting conversations with reinsurers," he said.
The new threat, Gossner said, was from reinsurers, such as Swiss Re, writing direct business. "They want to be our reinsurer and they want to compete for our business."
Gossner committed the group to fundamental changes and said it would refuse business that did not meet its criteria.
He said Allianz was committed to:
