Buyers are driving brokers toward more services and from commission to fees, finds a RIMS/Advisen study
A study has found that insurance buyers are driving brokers to change their service offerings and the way brokers are compensated.
The findings emerged from a broker services and remuneration study by the Risk and Insurance Management Society (RIMS) and Advisen.
The research finds that benefiting from the dynamics of a soft market in which brokers have shifted to offering new services and aggressive pricing, insurance buyers are demanding a wider array of service options. For the industry’s largest programmes, buyers are spending the majority of their broker money on fees instead of commissions, the study reported.
While virtually all survey respondents continued to use brokers to place insurance programs, the majority agreed that brokers are shifting from commissions to fee-based compensation.
The study also quantified services that buyers feel are missing from their brokerage programs. A large number of respondents indicated that they do not receive certain market placement services.
John Phelps, ARM, CBCP, CPCU, member of RIMS board of directors and director of business risk solutions for Blue Cross and Blue Shield of Florida, said: “The Broker Services and Remuneration Study as part of this year’s RIMS Benchmark Survey™ book combine to create an invaluable resource for risk managers. This is precisely the type of market intelligence that buyers seek as they navigate the migration to fee-based pricing and witness introduction of new services.”
He added: “Broker fees and services are areas that have undergone tremendous change over the past decade,” says David Bradford, editor-in-chief of Advisen, Ltd. “Most of those changes have resulted from competitive pressures and advances in technology; but some, especially the demise of contingent commissions for large brokers, have been imposed from the outside by regulators and law enforcement agencies. Whichever the reason, today’s soft market has the buyer in the driver’s seat looking at brokers to differentiate themselves through pricing models, service offerings and high-touch relationships.”