Broker

In October 2004, New York Attorney General Eliot Spitzer sued Marsh & McLennan over bid rigging and contingent commissions, the payments insurers made to brokers based on the volume or profitability of the business they brought in. Marsh settled for $850 million in January 2005, and the whole market was reminded who a broker works for. A broker acts for the client, the insured or, in reinsurance, the cedent. That is what sets it apart from an agent, who represents the carrier. The broker analyzes the exposure, builds the program, markets each layer, negotiates wording and price, and stays with the client through the claim. In large corporate risks and reinsurance a handful of global groups handle most of the placements and hold the market data, in cyber especially, which gives them real weight across the table from underwriters. The line is blurrier than it looks. At Lloyd's and elsewhere, the same broker may hold a binding authority and then acts on the insurer's behalf. In France the broker must be registered with ORIAS, and the Insurance Distribution Directive, applied since October 1, 2018, requires it to disclose the nature of its remuneration.