Our Compensation: Guide to How We are Paid
As an insurance broker, Marsh'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 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.
- Client Service Revenue
- Insurer Revenue
- Other Benefits and Compensation
- Our Contractual Arrangements with Insurers
1. Client Service Revenue
Client Fees and Commission (Sometimes Commission is referred to as Brokerage)
Retail Commissions: A retail commission is paid to Marsh 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 a fee for Marsh's services in lieu of, or in addition to, retail commissions paid by insurance companies. The fee may be collected in whole or in part through the crediting of retail commissions collected by Marsh for the client’s placements.
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 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 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. In the US, Canada and Bermuda, this compensation can be paid in the form of a fixed fee, a percentage of premium, or a combination of both. Outside of those countries, Marsh is compensated for these services through fees. There is a list of the insurers who pay us for consulting services on our website at: Leading the Way in Transparency.
Compensation for Insurer Administration and Other Services
Marsh operates certain panels, Placement Plus facility arrangements, quota shares, line slips and other placement arrangements with insurers. Marsh receives separate compensation relating to the creation, management, and operation of these arrangements that is in addition to any other fee or commission earned by Marsh.
A list of our quota-share and Placement Plus arrangements can be viewed on our website at: Leading the Way in Transparency.
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.
We never accept commission based only on the volume of business we give an insurer. In the rare circumstances that we take profit-related commission, we will tell you this.
3. Other Benefits and Compensation
Marsh 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 programmes, 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.
We and our subsidiaries or affiliates own shares in and have contracts with certain insurers and reinsurers. You can get more information from our website at: Leading the Way in Transparency.
We also own or have links with other insurance- related businesses that may provide services associated with a client's account.
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.