Our Compensation: Guide to How We are Paid
As an insurance broker, Marsh Commercial’s role is to place insurance coverage for our clients. We are compensated in a variety of ways, including commissions and fees paid by insurance companies and fees paid by clients. Marsh Commercial may receive compensation through one or a combination of the methods listed below.
We are paid in a variety of ways. Payments fall into the following categories.
1. Client Service Revenue
Client Fees and Commission (Sometimes Commission is referred to as Brokerage)
Retail Commissions: A retail commission is paid to Marsh Commercial by the insurer as a percentage of the premium charged to the insured for the policy. The amount of commission may vary depending on a number of factors, including the type of insurance product sold and the insurer selected by the client. Retail commission rates can vary from transaction to transaction. Client Fees: Some clients may agree to pay Marsh Commercial a fee for Marsh Commercial’s services in lieu of, or in addition to, retail commissions paid by insurance companies.
We receive wholesale broking payments when we are appointed by another (retail) broker who has a direct relationship with a client wanting insurance. The retail broker (which may be another Marsh Commercial office) instructs us to approach insurers on behalf of their client.
The payment to us may be a fee or a commission.
We provide a range of consultancy services to clients and, normally we are paid in the form of a fee.
2. Insurer Revenue
Marsh Commercial receives compensation from insurers for providing consulting, data analytics or other services. The services are designed to improve the product offerings available to our clients, assist insurers in identifying new opportunities, and enhance insurers' operational efficiency. The scope and nature of the services vary by insurer and by geography. Marsh Commercial is compensated for these services through fees.
Compensation for Insurer Administration and Other Services
Marsh Commercial operates certain placement arrangements with insurers known as delegated authorities. Marsh Commercial receives separate compensation,known as work transfer, relating to the management and operation of these arrangements that is in addition to any other fee or commission earned by Marsh Commercial.
We may receive payments from insurers for work we have done on their behalf. This work may include committing an insurer to insuring a risk, producing policy documents and settling claims
We may also receive payments for risk-management, risk engineering or other services.
3. Other Benefits and Compensation
Marsh Commercial may, from time to time, participate in insurance company promotional events or employee training and development provided by insurers. Sometimes, Marsh is reimbursed by insurers for its costs related to promotional marketing.
In the process of handling clients' money we may earn interest on, or benefit from, investment income or exchange rates. We receive payments from the companies that provide premium finance facilities to allow our clients to pay their premiums in monthly instalments.
4. Our Contractual Arrangements with Insurers
Marsh globally has agreements with certain insurers pursuant to which Marsh provides services to them and for which Marsh is compensated to the extent permitted by law and regulation in each country in which Marsh operates. Examples include captive management services, claims administration services, claims management software and associated services, mergers and acquisitions due diligence services, insurer consulting services, managing general agent and managing general underwriter services and insurance brokerage services regarding insurers’ own insurance programs. Marsh is also party to agreements with insurers that facilitate insurance transactions, including agency agreements, agreements to administer facilities, and agreements to operate internet-based insurance placing facilities.
Marsh also routinely enters into various types of agreements with insurers that are ancillary to the insurance broking process, or other services performed on behalf of clients. Examples include confidentiality and nondisclosure agreements for the release of data relating to insurance placements, claims handling and loss control programs, nondisclosure and or non-competition agreements relating to the development and disclosure of new insurance products and services, and licensing agreements governing access to and use of data management systems and databases.
For more information on Marsh's compensation or Marsh's contractual arrangements with insurers, please contact your client executive or account representative.
Leading the Way in Transparency
We will disclose to you:
- the role or roles we perform in an insurance transaction,
- a list of the insurers we propose to approach on your behalf and,
- any equity interests we may have in those insurers.
In common with many financial organisations, we provide a range of services to a large number of clients. We also provide certain services to insurers. Situations may arise in which the interest of a client may conflict with those of another client or with our own interest.
Accordingly, we have policies and procedures in place to ensure that should such circumstances arise, they are managed appropriately.
In an effort to advance the interests of our clients, we constantly search for innovative offerings and solutions. You can read further details about how we manage conflicts of interest [PDF and the Marsh and McLennan Companies Code of Conduct – The Greater Good.
Marsh & McLennan Companies Inc. and its subsidiaries own equity interests and have contractual arrangements with certain insurers, reinsurers and wholesale brokers. Information regarding these arrangements:
- Equity interests of Marsh & McLennan Companies, Inc. and its subsidiaries in insurers [PDF].
- Contractual arrangements between Marsh & McLennan Companies, Inc. and its subsidiaries with insurers and wholesalers [PDF].
The Marsh & McLennan ("MMC") group contains a number of other companies. Mercer is a premier human resource consulting firm that may provide health and benefits consulting and insurance placement expertise to Marsh clients. Guy Carpenter & Company is a leading reinsurance broker, and it may place reinsurance for insurance companies that insure a client's risk through Marsh. Oliver Wyman is a global leader in management consulting that may provide actuarial or consulting services to Marsh clients.
Use of Client Information
Marsh may include, on an anonymous basis, information relating to its clients' insurance programmes in benchmarking, modelling and other analytics. Marsh offers an array of analytics capabilities to clients, insurers and others. For clients, these offerings include benchmarking databases, analytics and modelling tools, surveys and other compilations of information, which are designed to help clients more effectively assess their risks, make more informed decisions and construct insurance programmes and other risk mitigation strategies. Marsh or its affiliates may in some instances receive compensation for its analytics offerings from clients, insurers and others. For more information about Marsh’s analytics capabilities and services, please visit the Analytics page.
MarketConnect is Marsh’s industry leading proprietary technology suite that allows Marsh to assist insurers in their efforts to improve their performance and create superior solutions for our clients. Within MarketConnect, Market Match is a proactive tool that allows insurers to identify business opportunities in advance of renewals, enabling them to be considered for risks for which they historically had not been considered. In MarketMatch, client names and certain other information are provided to insurers when viewing upcoming renewals that meet their stated risk appetite. MarketConnect is part of Marsh’s insurer consulting offering for which Marsh receives compensation from insurers.