DEAUVILLE, France—Brokers and insurers in France remain at odds over remuneration, but risk managers would like more transparency, said panelists at the recent annual conference of the Association pour le Management des Risques et des Assurances de l'Entreprise in Deauville, France.

Transparency became a major concern after former New York Attorney General Eliot Spitzer sued Marsh & McLennan Cos. Inc. in 2004 and led the world's four largest brokers to renounce contingent compensation from insurers, noted Marc de Pommereau, risk manager at GDF Suez Energie Services S.A. in Paris. The subject of broker pay and transparency reemerged in July 2009 after one of the four, Arthur J. Gallagher & Co., renegotiated permission to accept contingent commissions, he said. It remains to be seen whether other major brokers will attempt to do the same, though Willis Group Holdings P.L.C. has stated it would not.

“French law allows insurers and brokers to determine remuneration for the broker on premiums and management services, such as claims handling,” said Philippe Jouvelot, director of property and and casualty underwriting at AXA Corporate Solutions in Paris. Like other insurers, he said AXA resists increasing commission payments. “There is no legal obligation to pay a commission to a broker, however, and a broker should be able to freely reduce his compensation,” he said.

On fee-based brokerage, a system that applies to most large risk management accounts, “there is always an obligation of transparency between the broker and the client,” Mr. Jouvelot said.

AMRAE's position is that, rather than develop more regulation of brokers' activities, compensation should be disclosed by brokers at the request of clients, said Mr. de Pommereau, who moderated the panel discussion.

Jean-Pierre Pocholle, risk manager at Air Liquide in Paris, said that, from a buyer's perspective, insurance market participants are “understood to be faithful, flexible and reactive” to market conditions. He said a level of opaqueness in premium components makes it difficult for risk managers “to discern the full cost and who is paid for what.”

That lack of full transparency is not a “terrible” situation, but “risk managers have had to learn to adapt,” Mr. Pocholle said.

“Buyers are prepared to pay for services they need, at their fair value. We need to understand the structure of prices and be able to break it down,” he said. “Confidence and transparency are what the buyer-insurer-broker relationship is based on. The essential point is that buyers, brokers and carriers

work as a team.”

Describing the structure of premiums, Mr. Jouvelot said that when AXA sets premiums for large, international business accounts, the pure premium includes a charge for anticipated claims plus adjustments added for the cost of capital to meet solvency requirements, the cost of reinsurance, policy acquisition costs and any regulatory charges for fronting local policies, for example.

Bruno Vesval, director general at brokerage Gras Savoye & Cie. in Paris, said broker compensation must acknowledge the value brokers bring.

“The broker serves varied customers—for example, global businesses, individuals and even clients' customers,” Mr. Vesval said. “Brokers negotiate with multiple market players, provide multiple experts, provide guides and documents on managing risks and loss runs, and we follow premium fluctuations.”

The added value that brokers bring to clients and to insurers is differentiated and complementary,” he said. “You can't forget that brokers are important to the effectiveness of the insurance system,” he said.