Almost half the buyers who participated in the survey said they had made some significant change in the relationship with their incumbent broker, including replacing the broker or re-assigning some portion of their program to a new broker, or are considering a material change in their current broker relationship over the next 18 months, the release said.
The relationship between risk managers and brokers is changing as well. Nearly 40% of risk managers said they are now independently verifying the information provided to them from their broker and are taking a more active role throughout the placement process. About 60% of respondents felt that further standardization in the placement process would improve overall speed and efficiency of insurance transactions.
The survey found that, on the one hand, risk managers were satisfied with the industry reaction to revelations from New York Attorney General Eliot Spitzer’s investigations about compensation practices and chose to participate in the settlements between brokers and Spitzer. On virtually all compensation issues, risk managers overwhelmingly said their broker adequately discloses all compensation received in the placement of programs and that the level of transparency in the process was adequate or more than adequate.
On the other hand, disclosures from the Spitzer investigations about alleged bid-rigging and steering of programs to select insurance companies have led to a renewed focus on the placement process. Thirteen percent of risk managers have already switched brokers, with another 30% considering doing so in the next 18 months. The survey showed that many buyers of commercial insurance are more directly involved than before the investigations, either by asking for proof that their insurance was bid for competitively or reviewing quotes with the insurance companies themselves , according to responses.
Spitzer filed suit against Marsh & McLennan Cos. Inc. last October after an investigation into contingent commissions, a practice in which insurance companies reward brokers for sending business their way (See Spitzer Takes On Contingent Commissions ). Several insurance companies have been subpoenaed by Spitzer’s office since.
A copy of the full results of the survey of over 500 corporations and governmental entities can be purchased for $195 from Advisen by calling Jeff Cohen at 212-897-4820 or via e-mail at email@example.com .