Cherskasky stated that Marsh has already instituted a brokerage fee on U.K. business of about 2.5%.
“In the United States, we are engaged in discussions with insurance carriers in the middle-market and small commercial segments to begin to level the playing field,” he said. “Similar to the approach in the U.K., we expect to be paid an enhanced commission in these segments of the marketplace,” Mr. Cherkasky said during the call.
The extra commission would be fixed and “would not be contingent or variable on volume, profitability or any other factor,” he said. The commission will not be paid on large account business.
Mr. Cherkasky said that “a couple” of insurers have “agreed in principle with our enhanced commission approach, and we expect them to begin to pay them to us in early 2008.”
The commission will be disclosed to Marsh clients at the time of placement, he said.
“These compensation initiatives in the U.K. and U.S. are consistent with our agreements with regulatory authorities,” Mr. Cherkasky said.
Marsh has not accepted contingent commissions since 2004, noted Mr. Cherkasky. He said that has led to an “inequitable and unlevel playing field. Marsh experiences the impact of that imbalance most acutely in the small commercial and middle-market segments, where we compete against midsized and regional brokers that accept contingent commissions.”