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ABSTRACT This article addresses the role of independent insurance intermediaries in markets where matching is important. We compare fee-based and commission-based compensation systems and show that they are payoff equivalent [...]

Customer advisory groups (CAGs) are formal groups of customers (referring physicians, patients, health insurance brokers, etc.) who meet regularly to share their ideas and to provide feedback to proposed or existing marketing strategies, programs, and activities. While CAGs are very prevalent in other industries they appear to be relatively underutilized in health care. This article provides an overview of how CAGs work, their advantages and disadvantages, tips on how to make them work better, and insights from interviews with 39 healthcare chief marketing officers on their use of CAGs. KEYWORDS competitive advantages, customer advisory groups, leadership, marketing effectiveness, market research DOI: 10.1080/07359680903519826

The property and casualty insurance industry and insurance brokers are analyzed and discussed by four industry observers. Mergers and acquisitions, niche areas, and the regulatory outlook are some of the topics discussed.

ROLE OF the insurance company broker/dealer (B/D) has gone through a tremendous transformation over the past two decades. It wasn't all that long ago that the BID was seen as [...]

Leaders of the top three insurance brokers are having to face the dramatic changes imposed in the late 1990s, digesting new purchases and confronting new competitors.

The authors discuss issues concerning the liability of insurance agents and brokers for acts or omissions arising from their practices. Included is an analysis of theories of liability, the standard of care and duties owed to clients, and practical methods of guarding against problems.

Aon Group Inc's efforts to expand continue unabated despite its acquisitions of several large rivals since 1997 and the problems related to integrating those purchases. The brokerage arm of Aon Corp acquired three of the world's largest insurance brokers in 1997 and two more in 1998, yet it considers itself only halfway in terms of achieving its potential. Aon has over 600 offices worldwide and 33,000 employees. Aon Corp increased its total corporate revenues by 47.9% to $5.75 billion from 1996-1997.

Marsh and McLennan Cos. Inc. seems to have substantially been sated after spending a large part of 1997 digesting several acquisitions. The world's largest insurance broker has temporarily suspended its acquisition spree while integrating latest purchases, enjoying the benefits of previous ones and focusing efforts on providing better services to clients and on attracting new business. Total pro-forma corporate revenues increased 42.6% to $6.3 billion in 1997.

Broker reinsurers are doing well in a market characterized by mergers and shifting allegiances among ceding insurers. These intermediaries are finding alternative ways of providing their customers with the services they need. They have also entered related businesses such as captive insurance and risk purchasing. The 10 leading reinsurers in the US have registered a comfortable 11.7% increase in their revenues from 1993-1994.

A highly competitive market has forced insurance brokers to become more cost-conscious and broaden their service repertoire. In the past they could profit merely by procuring insurance. Now they must also serve as consultants and handle mundane risk management functions, and they must operate global networks. The tendency of clients to outsource risk management is partly the fault of brokers, who have avoided this function in the past., It's been a world divided for insurance brokers this past year, as the leading firms experienced some of the highest highs and lowest lows of the decade. In the process, [...]

Major brokerage executives say that clients' expectations and demands for services justifying their premiums have risen and brokers need to meet these demands through improved services. The executives agree that new challenges could be met through increased global networks that will respond to the international ambitions of their clients, and also through the consolidations, achieved through acquisitions and mergers., As the landscape of the world-wide insurance broking community continues to shift, brokers are struggling to meet the increasing demands of clients who have 'raised the bar' in terms of [...]

You are promoting a major international concert tour. Suddenly, a week before its opening, the singer falls ill and the tour must be canceled. If you were not insured, the […]

A provocative advertisement appeared in the U.K. music weekly Melody Maker in 1972. Amidst the full-page announcements proclaiming concert tours and new albums by such acts as Led Zeppelin, David […]

'A DIFFICULT INSURANCE MARKET creates opportunities.' That's how John Hahn, co-founder of Wholesale Trading Co-Op Insurance Services LLC, begins to answer the question of why it makes sense to launch [...]

The insurance brokerage industry continues to suffer from a soft market. Industry observers believe that brokers' financial prospects should improve in 1993 since things can hardly be worse than in 1992. Lehman Brothers analyst Michael Smith described brokers' 1992 results as 'mediocre.' Smith believes that the market should improve in 1993, particularly in property-related lines, such as commercial and business-interruption coverage.

Insurance broker Willis Corroon PLC, formed in 1990 by the merger of Willis Faber PLC and Corroon and Black Corp, spent approximately $59.8 million acquiring firms in Europe and North America. Gross revenues fell from 1990 figures of $1.14 billion to 1991 figures of $1.12 billion. Total revenues grew from $870.8 million to $1.22 billion. Willis Corroon's reorganization resulted in the formation of three major brokerage units and two underwriting branches. The units are Willis Corroon, Willis Faber and Dumas, Willis Corroon Consultancy and Specialty Sales, Willis Faber and Dumas Ltd.

Risk managers must cover a large number of concerns when requesting bids from insurance companies. Documentation must be complete, and sufficient time must be provided to research the company's needs. Selection of an agent requires care and foresight. Bidding requirements must be realistic, and provision should be made for possible errors and omissions., MOST RISK MANAGERS know that bidding is an important part of the insurance acquisition process. If the bidding process is not properly structured, confusion and misunderstanding may result which can [...]

CONSUMER PROTECTIONISM: A Threat to E&S Markets? In Buffalo, N.Y., surplus lines broker Kurt Bingeman has an ambulance risk he thinks should be placed in the excess and surplus (E&S) [...]

New York Although practical tips for brokers caught in the middle of a confusing directors and officers insurance market were scarce at this year's PLUS D&O Symposium, one specialty broker [...]

Scottsdale, Arizona As commercial lines insurance pricing stabilizes and sales revenue growth flattens, agents and brokers will step up their efforts to compete with more customer service offerings, but such [...]

It may be reminiscent of the mascot for the Princeton University football team, but the fact that wholesale brokerage Princeton Risk Managers uses the image of a tiger as its [...]

Cedents worried that their reinsurers could start slip-sliding down the rating agency downgrade slopes can rest assured that their reinsurance brokers are arming themselves with tools to help stop their [...]

Byline: Matt Dunning Several brokers have positioned themselves as objective consultants within the private health insurance exchange marketplace, despite having their own exchanges. Lockton Cos. L.L.C. and Crystal & Company, [...]

Sedgwick Group P.L.C. has opted to grow through smaller-scale acquisitions and the expansion of its fee-based consulting businesses rather than resorting to mega-merger deals. The firm is willing to consider a merger with a rival giant such as Aon Corp if the deal promises to improve shareholder value and help it achieve its goals of expanding consulting operations and increasing distribution channels. The broker reported $1.55 billion in 1997 revenues.

Jardine Lloyd Thompson Group PLC is well positioned to achieve its clients needs after completing the integration of two firms which constitute the existing company in 1998. The insurance broker believes it can provide clients with an alternative choice for companies such as Marsh & McLennan Cos Inc and Aon Corp. Total corporate revenues dipped slightly by 2% to 246 million pounds sterling in 1997. However, converted to US dollars based on average exchange rates, the firm's revenues increased by 2.9% to $402.9 million from 1996-1997.

Byline: Mike Tsikoudakis Risk managers, insurance brokers and insurance industry analysts rely on combined ratios to measure underwriting profitability as a way to assess insurer solvency. A combined ratio is [...]

Byline: Matt Dunning As self-funded health insurance plans grow more popular with employers, the commercial portfolios of some of the nation's largest health insurers have become increasingly weighted toward fee-based [...]

1166 Ave. of the Americas, New York, N.Y. 10036; 212-345-5000; fax: 212-345-4808; e-mail: musc@marshmc.com 1995 1994 Premium volume N/A N/A Gross revenues $3.79 billion $3.45 billion Brokerage: Retail 40% 43% [...]

Katharinenstrasse 10, 20457 Hamburg, Germany; 49-40-36050; fax: 49-40-367787 1995/96 1994/95 Premium volume N/A N/A Gross revenues $216,380,000 $194,656,000 Brokerage: Retail 82% 82% Reinsurance 13% 11% Personal 2% 2% Services 3% [...]

133 Houndsditch, London EC3A 7AH, England; 44-171-234-4000; fax: 44-171-234-4181 1995/96 1994/95 Premium volume N/A N/A Gross revenues $309,521,466 $283,928,660 Brokerage: Retail 21.86% 22.45% Wholesale 21.06% 21.81% Reinsurance 11.66% 13.77% Personal [...]

2-8 Rue Ancelle, 92200 Neuilly-sur-Seine, France; 331-41-43-5000; fax: 331-41-43-5555 1995/96 1994/95 Premium volume N/A N/A Gross revenues $204,376,800 $166,972,500 Brokerage: Retail 78.35% 77.70% Reinsurance 1.39% 1.85% Personal 10.17% 10.90% Services [...]

125 Broad St., New York, N.Y. 10004; 212-574-7000; fax: 212-574-7676. Internet: http://www.jh.com 1995 1994 Premium volume N/A N/A Gross revenues $1.08 billion $1.01 billion Brokerage: Retail 60.6% 63.1% Wholesale 6.3% [...]

Jardine House, 6 Crutched Friars, London EC3N 2HT; 44-171-528 4444; fax: 44-171-528-4185 1995 1994 Premium volume $2.88 billion $3.15 billion Gross revenues $359,784,000 $367,680,000 Brokerage: Retail 68% 64% Wholesale 13% [...]

Lloyd's Chambers, 1 Portsoken St., London E1 8DF; 44-171-680-4000; fax: 44-171-301-4007 1995 1994 Premium volume N/A N/A Gross revenues(*) $345,974,922 $326,610,144 Brokerage: Retail 57.1% 56.0% Wholesale 13.7% 15.2% Reinsurance 12.9% [...]

10 Trinity Square, London EC3P 3AX; 44-171-488 8111; fax: 44-171-488-8223 Willis Corroon Plaza, 26 Century Blvd., Nashville, Tenn. 37214; 615-872-3000; fax: 615-872-3091. Internet: http://www.wcg.co.uk 1995 1994 Premium volume $11.05 billion [...]

1185 Ave. of the Americas, New York, N.Y. 10036; 212-840-8500; fax 212-444-4697. Internet: http://www.alexalex.com 1995 1994 Premium volume N/A N/A Gross revenues $1.28 billion $1.32 billion Brokerage:Retail 54.8% 51.8% Wholesale(*) [...]

Fueled by the need for more sophisticated services by risk managers at both large and mid-sized companies, consolidation of the insurance broker industry will continue - gobbling up even some [...]

A new manual published by the Risk management Society Publishing Inc and the Risk and Insurance Management Society (RIMS) Inc is expected to be become available in spring 1996. The manual deals with the various facets of identifying, selecting and working with insurance brokers. RIMS executive Eugene Ricci notes that the publication of the manual was in response to numerous requests from RIMS members for information on the subject., In the spring of 1996, Risk Management Society Publishing, Inc. in conjunction with the Risk and Insurance Management Society, Inc. will publish an important manual that outlines the various aspects [...]

The best insurance brokers possess six qualities, each personified by six different brokerages. They have the global presence of Marsh & McLennan, the compensation and incentive systems of Acordia, the expense control of Alexander & Alexander, the alternative risk abilities of AJ Gallagher, the technical acumen of E.W. Blanch and the acquisition strength of Rollins Hudig Hall., I was recently asked which insurance broker I would rate as the best positioned to succeed in the ever-challenging environment the insurance industry finds itself in today. After some thought, [...]

Byline: Ian McManus arious changes over the past 20 years have presented significant challenges for the personal lines broker market, from the advent of direct writers to the rise of [...]

Environmental litigation is a new entanglement which upstream industries are bound to face. An insurance broker is required to handle legal problems of environmental damage liability and is capable of structuring protection programs. Management and planning for environmental issues will reduce if not totally eliminate environmental risks. The environmental problem has to be recognized so that the proper resources can be allocated.

DAVID BARDELLI NEW JOB TITLE: Boston-based senior vp and casualty practice leader at William Gallagher Associates Insurance Brokers Inc. PREVIOUS POSITION: Boston-based senior underwriter, global casualty at Zurich North America. [...]

Byline: SONJA RYST While the largest publicly traded insurance brokers increased their total revenue during the first half of the year, net income for three of the five declined due [...]

The lack of capacity in the London, England catastrophe reinsurance market and the huge rate increases that have characterized 1993 have brought catastrophic reinsurance brokers' commissions under attack from reinsurance companies and ceding companies. Some reinsurers are demanding an end to brokers' commissions or are negotiating new compensation schemes. One broker already has ended commissions, and Lloyd's of London has announced it will offer a sliding scale for commissions for its larger policyholders.

Lloyd's of London management is tackling with the problem of attracting more business from its brokers as its ten largest brokers only place between 5% and 20% of their overall coverage with Lloyd's. To make the venerable property and casualty insurer more attractive to brokers, Lloyd's management intends to cut costs by streamlining operations to promote efficiency. Management hopes to implement electronic placing, improve documentation and policy placement, redesign its claims processing and improve the central provision of management information.

Willis Corroon Group PLC, ranked fifth largest in the world by 1992 revenue in Business Insurance magazine's annual review of the insurance brokerage industry, wants to become the second-largest broker. CEO Richard Miller emphasized the company's strategic objectives by having them printed on laminated cards to be given to all managers. Miller feels that the company has overcome any problems it faced arising from the merger of Corroon & Black Corp and Willis Faber PLC in 1990. Willis Corroon Group recorded gross revenues of $1.08 billion in 1992.

American Business Insurance Inc (ABI), ranked 17th largest in the world by 1992 revenue in Business Insurance magazine's annual review of the insurance brokerage industry, is attempting to develop niche markets as a way to combat the soft insurance market and the poor economy. CEO Stephen J. Leaman equates specialization with efficiency and so is focusing the company on its expertise in fewer markets than before, among them energy, aviation and non-profit institutions. ABI reported 1992 gross revenues of $126.5 million.

Hogg Group PLC, ranked 12th largest in the world by 1992 revenue in Business Insurance magazine's annual review of the insurance brokerage industry, is well-positioned to grow internationally, according to Chmn James Vaughn. Hogg Group derives a significant proportion of its gross revenues from its US subsidiary, Hogg Robinson Inc, and the US market was particularly hard hit by the worldwide recession. Hogg Robinson restructured and downsized in 1992, and Hogg Group expects to realize the financial benefits of those actions in 1993. Hogg Group PLC recorded 1992 gross revenues of $220.2 million.