Our broker service charge does not fall foul of Bribery Act, says Aon

Aon came out fighting this week, to defend its controversial carrier charge, as tensions mounted with Lloyd’s over broker remuneration and the new Bribery Act.

The Lloyd’s Market Association (LMA) revealed last Thursday that it was seeking legal counsel from law firm Reynolds Porter Chamberlain and will advise underwriters this month over broker remuneration.

In a double effort from Lloyd’s, performance management director Tom Bolt sent a letter to insurer chief executives advising them about signing up to broker service charges, especially with the new Bribery Act set to come into enforcement this July.

Although not named specifically, the Aon carrier charge (ACC) – a 3.5% commission charge for administrative services – was in the firing line. According to a high-level London Market source, Lloyd’s is concerned that the ACC is too general, and insurers may need to know more about exactly what they are paying for in order to satisfy the new Bribery Act and FSA regulations.

But an Aon spokesman said: “We really don’t see that there is any suggestion of anything being done here that will fall foul of the Bribery Act. And, certainly, we would want to make sure that that is not the case, and it’s certainly not our intention. This is a commission, and paying any commission to a broker does not, as far as we are aware, cause any problems in relation to the forthcoming Bribery Act.”

There have been concerns that the ACC hides commission increases at a time when insurers are battling a soft market and low demand, but the spokesman said: “There is no intention of this being a hidden increase. This is replacing charges that are already there.

“It’s about simplicity and reducing the complexity we have and making the whole process more straightforward.”

Insurance Times can also reveal that doubts linger about Aon’s Global Risk Insight Platform (GRIP), with a number of underwriters, including Liberty, Mitsui, HDI Gerling, Travelers and Tokio Marine, yet to sign up to the database, which is now in its second year of operation.

Some underwriters believe that GRIP does not give enough detailed information for the price charged, although Zurich, QBE and Chubb have all signed up.

A source said there had been concerns that those underwiters not signed up to GRIP might lose Aon-brokered business.

The Aon spokesman responded: “We do not steer business. We will not be directing business preferentially to certain people because they have paid up for GRIP solutions.”