Survey finds widespread risk manager discontent

Risk managers want to see an overhaul of the current system for buying insurance coverage, according to a new survey by New York-based Advisen Ltd.
In a survey of 700 risk managers, almost 75% said they want more standardization and transparency in insurance buying transactions. At the same time, almost 68% say their organization needs better access to information on pricing and other aspects of the insurance transaction.
Almost every risk manager said they had had conversations with senior management about the current controversy surrounding broker contingent commissions and the investigations sparked by New York Attorney General Eliot Spitzer.
The survey also highlighted a significant distrust of brokers 54% said they think contingent commissions represent a conflict of interest, while 57% say brokerage firms do not disclose all information about insurance transactions. Even more significant, 52% of risk managers say they are “concerned that their brokerage firms may have participated in anti-competitive practices”.
However, almost two-thirds of risk managers say they do not foresee changing brokers, and there was little consensus on the impact the investigations would have on the cost of risk or the quality of broker services in the end.
“Clearly risk managers perceive a need to transform big parts of the industry, but they seem to blame the system rather than their brokers,” says David K. Bradford, executive vice president and editor-in-chief of Advisen. In fact, in written comments risk managers expressed dismay that all brokers were being tarred with the same brush. However, Bradford notes, “the winds of change are surely blowing and right now they’re blowing in the direction of greater market transparency.”