Insurance brokers Marsh and Aon hold an almost equal amount of the brokerage market, with Marsh holding a slight lead, according to a survey of risk managers.
In the Risk and Insurance Management Society (RIMS) and Advisen, Ltd. "Broker Services and Remuneration Study" released today, risk managers said Marsh and Aon are used most frequently by them, accounting for about two-thirds of the insurance programs placed through brokers.
Willis held about 14 percent of the market, according to the survey, with Lockton and Arthur J. Gallagher rounding out the top five.
The market share figure is based on policy count and does not reflect market share by dollar volume, according to the report. David Bradford, executive vice president and editor in chief of Advisen, said Marsh's market share is in the upper 30 percent, while Aon placed in the lower 30 percent.
The broker portion of the survey is part of the "2008 RIMS Benchmark Survey." This is the first time the survey has examined in depth the relationship of risk managers with their brokers.
A total of 1,519 participated in the survey, with more than 1,300 participants answering questions about the broker and risk manager's relationship, Mr. Bradford told National Underwriter in an earlier interview (see NU Online April 18).
Among some of the other findings, fee arrangements are the most popular form of compensation among brokers, according to 70 percent of the respondents.
Eighty-one percent of companies with revenues greater than $10 billion have fee arrangements, while the fee-commission compensation structure is split about 50-50 for small accounts with less than $100 million in revenue, the survey found.
The fee structure arrangement is most popular with information technology industries, closely followed by consumer staples and telecom. On the low side, about 50 percent of the education industry opts for fee structure, according to RIMS-Advisen.
Fee arrangements can vary from a low of $15,000 to $10 million, but the average fee runs about $483,000, the survey said.
"Broker fees and services are areas that have undergone tremendous change over the past decade," Mr. Bradford said in a statement.
He said technology, competitive pressures and the demise of contingent commissions among the largest brokers has led to these changes, but today's soft market has put buyers "in the driver's seat looking for brokers to differentiate themselves through pricing models, service offerings and high-touch relationships."
Close to 76 percent of survey respondents said they believe brokers are shifting from commissions to fee-based pricing and are supplementing their commissions with added service fees.
Most risk managers–67 percent–believe the brokerage market is more competitive than three years ago. However, when asked if broker compensation has dropped over the past three years, the results were evenly split with 46 percent in agreement that it has and 46 percent saying it has not.
The report also examined other areas of compensation including lines of business and services rendered for fees.
Details of the survey are available at www.rims.org.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.