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Mercer Marsh Benefits

Transparency and Disclosure Statement

Our commitments and how we are paid

Mercer Marsh Benefits (“MMB”) provides clients with a single source for managing the costs, people risks, and complexities of employee benefits. It is a collaboration between Mercer and Marsh companies, global leaders for innovative and reliable health and benefits advice strategic solutions, and brokerage services. In Australia Mercer Marsh Benefits is a business name of Marsh Pty Ltd (ABN 86 004 651 512), Australian Financial Services License 238983.

  • We take pride in our transparency and disclosure approach, and we make the following commitments when working for our clients:
  • We engage in ethical business practices
  • We define with our clients the terms of our engagement, including our role and responsibilities
  • We make available to our clients on request, and subject to local law and practices, our compensation from insurers and other third parties and our interests in the services we provide our clients
  • We manage conflicts of interest with integrity and are committed to treating clients honestly and fairly

Our commitments are applied throughout MMB globally, although how we are compensated, and the nature of our disclosure may differ according to the services we provide and in accordance with local law and practices.

This Global Transparency and Disclosure Statement summarises the types of compensation received across MMB globally. There may be countries that either do not receive certain of the compensation types noted below due to local practices or restrictions under local law and regulation. Accordingly, please consult your local MMB consultant for information related to a specific entity.

Broadly, MMB offers a wide range of services to its clients, with a variety of compensation arrangements with clients and insurers, including one or a combination of:

  1. Fee arrangements
  2. Commissions
  3. Insurer services revenue
  4. Other forms of compensation

1. Fee arrangements

Some clients may agree to pay a fee to MMB for the services it provides in lieu of, or in addition to, any commissions MMB agrees with insurance companies. Fee amounts will be agreed with clients and included in the contract for services entered into between MMB and client at the outset of the engagement.

2. Commissions

Broking commissions are agreed between MMB and insurers based on a percentage of the premium charged to the client for its insurance policy, less taxes and statutory charges. The commission is included in the premium charged and constitutes compensation to Marsh for arranging the insurance. Marsh retains the commission from the premium you pay Marsh and it then remits the balance to the insurer. 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, and commission rates may vary from transaction to transaction and change from time to time.

3. Alternative Commissions

MMB may receive different types of commission from insurers in addition to the broking commissions above as follows:

  • Additional Commissions: MMB may negotiate additional commissions with insurers for certain types of placements at the start of the year or a specific period, and they are fixed for the duration of that year/specific period.
  • Threshold Commissions:  in some countries MMB may also negotiate commissions (may be referred to as contingent or supplemental commission) at the start of the year or a specific period which are earned only when MMB meets an agreed threshold based on volume, retention, or growth of the relevant portfolio. MMB does not enter into any Profit-based threshold commission arrangements with insurers. In Australia threshold commissions are only agreed with an insurer if MMB binds the insurance policy on behalf of the insurer via a binding authority.
  • Scaled commission:  commission structured differently across time, i.e. the first year % of commission is typically higher (in lieu of business acquisition costs for the broker), and in subsequent years it drops to a lower level.

Additional information about MMB’s insurer commission arrangements are available to MMB clients on request to MMB.

4. Insurer services revenue

MMB receives compensation from insurers for specific portfolio-related services delivered by MMB (or MMB’s representatives), in some cases by dedicated teams.  These insurer relationships are documented in formal service agreements.  Depending on the services, MMB may receive fee-based compensation or compensation that is set as a percentage of premium.

MMB earns three types of compensation associated with the different forms of services provided to insurers as follows:

  • Insurer Consulting Compensation: MMB’s insurer consulting team may provide a range of consulting and data analytics services to insurers designed to improve the product offerings available to MMB policyholders, assist insurers in identifying opportunities, and enhance insurers’ operational efficiency.  Compensation for these services is by fixed fee only – MMB’s insurer consulting compensation arrangements do not include percentage-based compensation, discretionary components, bonuses or variable elements.
  • Insurance Solutions Compensation: MMB may create, manage and/or administer certain panels, portfolio facilities, quota shares, line slips and binding authorities and participating insurers may compensate MMB for the activities MMB carries out for or on their behalf by way of a fixed fee and/or on a percentage of premium basis.
  • Work Transfer Compensation: MMB may receive compensation from insurers for administrative work that MMB does for or on their behalf, including where MMB assists with policy servicing, claims, and placement execution (which is unrelated to the work MMB carries out as broker, and for the avoidance of doubt, MMB will not receive compensation twice for the same service).

Additional information about MMB’s insurer services compensation arrangements are available to MMB clients on request to MMB.

5. Other forms of compensation

MMB may also receive other forms of compensation including the following:

  • MMB may, from time to time, participate in insurer sponsored promotional events or employee training and development, and sometimes MMB is reimbursed by insurers for costs related to promotional marketing. Marsh’s representatives may also receive non-monetary benefits from insurers. This may include entertainment at sporting events, hospitality including lunches, training, and attendance at insurer sponsored functions. It is not possible to determine in advance what, if any, non-monetary benefit a representative may receive and these benefits are not generally attributed to any particular product or transaction. Marsh has compliance policies designed to mitigate the risk of these benefits creating a conflict with your interests.
  • Additionally, in the process of handling premium money we earn interest which MMB retains, and MMB may benefit from, investment income or foreign exchange rate differentials, although MMB can also incur losses from the same source.
  • MMB receive commissions and fees from the companies that provide premium finance facilities if MMB assists clients to obtain that premium finance.
  • In certain countries MMB may also enter into referral arrangements with third parties (including insurers) to refer clients to these third parties for their provision of products or services, and MMB may receive referral fees for this.
  • Distribution Brokerage – for placement of a general insurance policy in Australia where MMB is remunerated by fee from its client, it also collects from insurers a distribution brokerage of 2%, which is in addition to and will not be credited against any fee payable to MMB and will not be subject to any non-statutory cap on commissions payable to MMB.
  • Documentation Charges/Fee –  where commission or a fee is paid to MMB, we may also charge clients an administrative fee to cover administrative tasks that are performed in the insurance placement process, such as policy invoicing, premium collection and remittance.

6. Requesting details of how we are paid

Clients of MMB may obtain further details of how we are paid by making a request to their usual MMB contact.

How we are compensated and the level of information we can disclose may change according to the services we provide and in accordance with local law and practices.

7. Related Party Transactions

We and our subsidiaries or affiliates own shares in and have contracts with certain insurers and reinsurers. We also own or have interests in other insurance-related businesses that may provide services associated with a client's account.

Marsh 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.

Risk Consulting Funding – in some instances Marsh arranges a pool of funding, which is made available by an insurer or scheme agent to a category of Marsh clients. With the client’s and the funder’s consent, Marsh may then apply the funding to pay for Marsh’s risk consulting services for the client. Marsh may allocate to itself a project management/administration fee of 10% of the pool as compensation for Marsh’s role in managing the pool and for associated administration services for clients.

Where Marsh or MMB is involved in arrangements whereby insurers pay it fees or brokerage, Marsh and MMB may be considered to have an incentive to place a broking client’s insurance with these insurers. In order to control any potential conflict of interest arising from the provision of services, Marsh employs and acts in accordance with its policies and procedures.

Marsh & McLennan Agency Pty Ltd (ABN 33 000 668 584) (‘MMA’) in Australia provides insurance products to third party brokers who utilise its services (including Marsh Pty Ltd and Marsh Advantage Insurance Pty Ltd) and it is remunerated by insurers who underwrite the insurance products provided via MMA.

Mercer is a global leader in talent, health, retirement, and investment consulting.

Guy Carpenter & Company Pty Ltd (ABN 95 000 351 299) and Marsh Resolutions Pty Ltd (ABN 19 055 301 721) are reinsurance brokers, and may place reinsurance for insurance companies that insure a client’s risk through Marsh.

If you have any questions about MMB’s transparency and disclosure commitments, or would like information on the compensation we receive, please do not hesitate to contact your MMB client contact.

Marsh McLennan is the leader in risk, strategy and people, helping clients navigate a dynamic environment through four global businesses. Marsh  GuyCarpenter  Mercer  OliverWyman