British RMs Say Ban or Investigate Broker Fees
NU Online News Service, Nov. 8, 4 :16 p.m. EST?The U.K.'s Association of Insurance and Risk Managers is calling for an overhaul of the insurance buying process prompted by a survey of corporate insurance buyers in Europe and the United Kingdom.[@@]
The survey, released Nov. 5, found that 93 percent of buyers surveyed?200 respondents, or about 40 percent of AIRMIC's 450 member companies?would like to see the practice of broker contingent commissions banned or subject to investigation. Of those surveyed, 64 percent said the practice always created a conflict of Interest, AIRMIC announced.
The study also found that 99 percent of risk managers find it important to have full disclosure of how much they spend on insurance goes to their broker and that only 54 percent are satisfied with the level of disclosure they receive.
Ninety-one percent are concerned by the bid-rigging allegations in New York Attorney General Eliot Spitzer's lawsuit against Marsh McLennan Companies, the Marsh Inc. brokerage parent firm. Fifty-four percent said their boards have expressed a similar concern.
The survey found that 13 percent have changed brokers because of lack of disclosure and 49 percent will consider doing so in light of the investigations by Mr. Spitzer and other states?66 percent said they will require more disclosure information when they renew their policies.
Of buyers surveyed, 68 percent accept brokers being paid for administrative work for insurers, as long as it is accompanied by full disclosure. Thirty-seven percent said they would prefer to deal directly with their insurers and 26 percent said they are undecided.
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