More Companies Looking To Engage Carriers Directly

Large companies in Europe and the U.S. are indicating increased interest in dealing more directly with insurance carriers, a move which could affect the nature of broker relationships, according to new research from Greenwich Associates.

Greenwich Associates, a Stamford, Conn.-based international consulting firm in institutional financial services, said almost half of large European companies and more than a quarter of large U.S. companies are considering such action.

The firm said businesses in the United States plan to deal more directly with carriers to improve access, gain greater control of the purchasing process and reduce costs. In Europe, businesses planning to go direct to carriers cite the desire for improved service and responsiveness as the primary reason, followed by potential cost savings and control and access.

The deepening economic recession has resulted in “a laser-like focus on costs,” Greenwich Associates said. The firm added, “With corporate revenues and earnings plummeting, no area of business is exempt from painful cost-cutting efforts–including insurance brokers.”

Greenwich Associates consultant David Fox said, “What is critical for companies to keep in mind is the fact that most brokers play a critical role in the complex task of risk management–a function in which mistakes can have disastrous consequences in the form of gaps in coverage or other failures. Mitigating or managing these risks requires a certain level of expertise and resources. These capabilities are not optional. You can build them in-house, or you can rely on a broker, but you can't risk going without.”