Of the 135 respondents, 64 percentor 86 individualswere members of the top-100 commercial insurance brokers. Nearly half of those 86 respondents were from the four largest brokerages.

Mr. Bradford reported that 65 percent of the respondents feel they are now obligated to enhance their disclosure with their clients, while 16 percent of the brokers declined to answer the question. (He noted it was unusual that so many respondents to refuse to answer a particular question.)

The remaining 19 percent said they did not feel the need to enhance disclosure. Nearly 77 percent said they anticipate higher transparency about how the industry operates would be required.

The vast majority92 percent of respondentsfelt that state regulators would require greater disclosure on broker compensation. “The point is clear that brokers are feeling pressure now,” Mr. Bradford suggested.

In open-ended comments Advisen received as part of the survey, brokers said that the total cost of risk would increase or stay about the same regardless of the fate of contingency fees.

Mr. Bradford said the brokers indicated they feel they should be compensated for their work and that it is only a question of whether the income is from the client or the carrier in the form of traditional commissions. Their feeling was similar to the response of over 700 risk managers in a survey released by Advisen in November.

Both survey groups indicated they feel the cost of risk will remain the same, or perhaps even increase, because the cost of broker services would be passed onto clients.

Whatever expenses intermediaries do pass on, Mr. Bradford said, brokers feel revenues could very well decreaseat least in the short termor at best remain the same.

“There is a very strong concern, from the comments we received, that they feel it will be very difficult to make up [the lost] income,” he said. “And that could be fatal to smaller brokers who rely on this income.”

Besides the standard question-and-answer section, where the statistics were drawn, the survey allowed for brokers to submit anonymous, written comments, Advisen noted. In the comments, brokers blamed a few bad actors for the damage to the industry and to their reputation.

“Contingent income was not a conflict for 99.9 percent of insurance brokers in the country who always strive to serve their clients needs,” said one anonymous comment released by Advisen.

“I think there is an unintended consequenceless competition,” went another comment. “The smaller brokers and agents will be driven out of business if they lose contingent income.”

Mr. Bradford noted that the comment section was included because in the survey of risk managers, respondents were inclined to make “copious and impassioned comments,” despite the fact that there was limited space for comment. In this survey, the firm wanted to make sure respondents had ample opportunity to comment.

“In every case, we came up with deeper insight into the issues,” he observed of the comments. “It became clear what is on the mind of the marketplace.”

“There was unanimous opinion among the brokers that they did not believe [bid-rigging and other market abuses of contingent commission fee placements] was happening in the industry,” he continued. “They believe there may be a few incidents, but it is not a pervasive practice in the industry.”

Mr. Bradford also noted that the response rate for the survey was very high at 18 percent, where the classic response rate is somewhere in the single digits.

“It is indicative of the level of importance brokers attach to this issue, and this survey has given them a way to express that,” he said.

Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.