The role of the reinsurance intermediary in the United States has been tested in unprecedented ways in the last several years. Many of the challenges are the same as those affecting the financial services industry in general–increased competition, enhanced client service requirements, a focus on sophisticated technical analysis and regulatory scrutiny.

There are also challenges that are unique to the reinsurance intermediary–increased compensation transparency, the threat of a declining reinsurance market and competition from the capital markets. To meet these challenges brokers will need a platform that adapts to the new environment.

Reinsurance intermediary services have, in general, a higher profit margin than primary insurance broking. It is not unusual for a broker to earn $5 million in revenue for placing $1 billion of property-catastrophe coverage for a single year, assuming a 10 percent rate-on-line (ratio of premium-to- limit) and a standard 5 percent brokerage rate.

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