1. Insurance Brokerage Review of the insurance distribution system
The brokerage business
Background
Recent events
View of a broker
Scott Strickland
Senior Vice President
Brown & Brown of Washington, Inc.
Thoughts for the future

2. Insurance Distribution System - Background
Independent agents and brokers
Agents
Brokers
Exclusive agency system
Direct marketing sales

3. Insurance Distribution System – Background - 2
Role of insurance producers
Some stats
How many producers in the U.S.
Is it changing
Personal lines v commercial lines
Agents
Brokers

4. Insurance Distribution System – Background - 3
Agent v broker
The distinction
Real v theoretical
What do customers think
What do companies think

5. Insurance Distribution System – Background - 4
Who are insurance brokers
There are national and regional firms
Names in the news
Marsh
AON
Willis
May others large and small

6. 2003 (generated by U.S. clients)
Top 10 U.S. Insurance Brokers and Revenues
2003 (generated by U.S. clients)
Rank
Company
2003 Revenues*
($ millions) 1
Marsh & McLennan Cos Inc
$5,250.6 2
Aon Corp.
3,232.5 3
Arthur J. Gallagher & Co.
1,082.2 4
Willis Group Holdings Ltd.
1,022.0 5
Wells Fargo & Co**
800.5 6
BB&T Insurance Services Inc.
604.7 7
Hilb, Rogal & Hobbs Co.
551.3 8
Brown & Brown Inc.
545.3 9
USI Holdings Corp.
352.3 10
Lockton Cos. Inc.
289.1***

7. Insurance Distribution System – Background - 5
What is the role of an insurance intermediary
Traditional
Changing role of the intermediary
Responding to changing customer needs
Value added services

9. Insurance Distribution System – Background - 6
How are insurance intermediaries compensated
Who pays for all this
Commissions
Fees
Special arrangements
Customers
Insurance companies

10. Recent Events -1 Eliot Spitzer, New York Attorney General
Investigation into contingent commissions
Charges of bid rigging
Marsh & McLennan Companies
Other companies involved
AIG
ACE
Zurich American Insurance
The Hartford
Munich American Risk Partners

12. Recent Events - 2 Ending contingent commissions
MMC
AON
Willis
Refunds of commissions to clients
Employee terminations

13. Recent Events - 3 Transparency and disclosure What’s important
Cost v benefit
Industry response
CIAB
RIMS
NAIC
Financial Services
Sarbanes-Oxley
GLB

14. Recent Events - 4 How are agents and brokers regulated
State regulation
Financial services modernization

15. The Future of Insurance Brokerage
Some thoughts on changes in the industry
Products and services
Distribution channels
Intermediaries
The economics