Insurance buyers in the current soft market are demanding a wider array of service options, and for the industry's largest programs, they're spending the majority of their broker money on fees rather than commissions, according to a recent study by the Risk and Insurance Management Society (RIMS) and Advisen Ltd.

The "Broker Services and Remuneration Study" in the 2008 RIMS Benchmark Survey book is the first comprehensive study of the relationship between commercial insurance buyers and brokers since the industry tumult in 2004 and 2005.

Based on data gathered in February from 1,519 participants, buyers were asked how their brokers are compensated, what brokers receive for their services, and what types of services they provide.

While most survey respondents continue to use brokers to place insurance programs, the majority agree that brokers are shifting from commissions to fee-based compensation and note a trend toward supplementing declining commission with added services. The study quantifies the differences in average costs to insurance buyers of fee-based broker remuneration, as opposed to traditional commission-based remuneration.

The study also quantifies services that buyers feel are missing from their brokerage programs. A surprisingly large number of respondents indicate that they do not receive certain market placement services within the standard services covered by normal broker compensation.

The study also enumerates a string of loss, exposure and financing analysis services, which many buyers--nearly 40 percent in some cases--would purchase if offered by their broker. Additionally, there remain significant differences by size of company and industry group in the types of services provided.

Risk managers and buyers can contribute to the RIMS Benchmark survey by designating their broker to provide the client's program details through Advisen's Broker Authorization Letter, available at www.RIMS.org/brokerform or by calling 212-897-4800. Risk managers can contribute by e-mailing current and prior year policy schedules to Benchmark@RIMS.org or faxing to 212-655-7453.

Special Reports /

Advisen-RIMS study finds shifting relationship between buyers and brokers

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