Underwriter protest at Aon fee restructure

Aon is overhauling its charging structure, provoking protest from underwriters who believe it is seeking payment increases.

Aon denies it is actively seeking increases, claiming it is only aiming to “standardise and simplify” its fee structure.

A source told Insurance Times that underwriters were resisting the changes, but feared Aon would pull business if they didn't sign up. They were also concerned that agreeing to Aon's demands would pave the way for rival brokers to seek similar increases.

An Aon spokesman dismissed suggestions that the broker was putting pressure on underwriters, adding that it was negotiating in the best interest of its clients.

He said Aon provided administrative services to insurance carriers related to policy issuance, accounting, delivery and document storage, and was compensated for these services “in a variety of ways”.

The spokesman said: “We are replacing an old structure with a new structure, not creating new charges. Our aim is to standardise and simplify the compensation process, not increase compensation; our goal is to create a simpler process for existing charges.”

He added: “As discussions on this are in progress with carriers, we would not wish to comment further.”

The spokesman said that charges for Aon’s Global Risk Insight Platform (GRIP) – a database of information on corporate clients’ risk – was totally separate from its administrative services.

Aon is not alone in seeking remuneration from London underwriters. In a document entitled ‘How we get paid?’, Willis said it was implementing a programme to charge “subscription market brokerage” in some of its specialty lines when placing business into subscription markets – predominantly London.

The Willis document said this is because it faces increased costs from dealing with the subscription market and that it performed extra administrative, regulatory, accounting and support functions to complete subscription market placements.

It added that underwriters recognise the costs and “agree that a negotiated percentage of the premium to account for these costs is appropriate and helps assure competitive access to that market”.

Marsh was unable to comment at the time of going to press.