Listening To Your Customer

A recent survey asked risk managers what they thought of contingency fees, also known as placement service agreements. The survey revealed that among those risk managers willing to anonymously speak their mind, a majority are not comfortable with the arrangements. Buyers, it appears, have a hard time believing that an insurer willing to pay more in commission for a book of business than another would have no influence over a broker’s decision-making.

Marsh is the culprit for starting this, according to Advisen, the New York City consulting firm that performed the survey and published a report about contingency fees (which, for the uninitiated, are extra commissions insurers pay to brokers for giving them a profitable book of business, or, in some cases, a certain premium volume). Marsh felt it was doing a lot of work for carriers and should be compensated for it, Advisen noted. After the carriers saw the wisdom of Marsh’s argument, other brokers felt they deserved the same treatment.

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