The big brokers are having to backtrack on commissions, says Elliot Lane

' When Aon first suggested its service fee card to the industry, the collective response in the London market was an intake of breath only released by incredulous laughter.

Lloyd's and London market underwriters baulked at the 3.7% to 5% charges and after the Spitzer affair, it seemed churlish behaviour from Mahoney and his colleagues.

It is understood Andrew Beazley was one of the first to challenge Aon's superiority complex and many others have followed.

It seems to have worked. Aon has now gone back to the drawing board and scribbled down a new blanket figure of 2%.

Heath Lambert's decision to keep it simple and charge a flat 1% rate has forced its bigger rivals to take note and keep the figures manageable and bite-sized.

The question is where does this leave Marsh? Its business plan has yet to be finalised and Aon's move may cause the broker to pull out the blackboard and calculator again.

It cannot afford to go lower than 1%,but will have difficulty explaining a figure of more than 2% to the sceptical boardrooms of UK plc since Aon is now leading the field.

So will Marsh go even Stevens at 1.5%? Again that kind of level will not cover the lost millions in contingent commissions that it desperately needs to claw back. Marsh, ironically, is in an economic quagmire.

At this week's Biba conference the atmosphere should be, if not electric, at least charged over the issues of the market post-14 January and whether the major brokers are still interested in pursuing the regions.

Marsh's new boss Michael Cherkasky has made it clear that small, unprofitable clients are no longer on its radar and that could lead to yet more upheaval north of Watford.

Brokers who have been tied to their desks for months may finally be looking above the parapet and searching for that elusive deal. But what is available?

The venture capitalist market controls the more lucrative elements of the market such as Smart & Cook and Broker Network. Folgate is ready to buy up another £80m GWP broker.

Pens will be out but this may be just to work out how much money is left in the broker pot by the end of the year. IT