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MONTE CARLO, Monaco-The megamergers among brokers and insurers over the past year have been primarily client-driven rather than motivated strictly by a quest for market dominance, broker and insurance executives say.

Dick Verbeek, Rotterdam-based chairman of Aon Risk Services Worldwide, said Aon's expansion over the past year with its acquisitions of Alexander & Alexander Services Inc., Bain Hogg Group P.L.C. and Minet Group was "not done out of a megalomaniac need to be No. 1 or No. 2."

"It is happening because our clients are getting more international," added Mr. Verbeek.

He said Aon is "basically reacting to what is happening in the world" in terms of globalization and client demand for more competitive pricing. "We are ultimately changing to be much closer to what the client wants," Mr. Verbeek added.

Globalization among businesses requires that insurance brokers increase their "critical mass," giving them a global spread of resources, wide-ranging advisory skills, a wide range of services and negotiating strength for clients, Mr. Verbeek said at the Risk Management Forum in Monte Carlo, co-sponsored by the Federation of European Risk Management Assns. and the Risk & Insurance Management Society Inc. of the United States and Canada.

While the mergers and take-overs of the past years are reducing the number of top-flight brokers, they are strengthening those that remain.

Competition will intensify among these megabrokers, producing better answers for clients, Mr. Verbeek predicted. He also said this will produce polarization of brokers, with fewer megaplayers but an increase in the number of niche brokers.

Mr. Verbeek's viewpoint is shared by Rick Hudson, group executive-global brokers of London-based Royal & Sun Alliance Insurance Group P.L.C., who spoke in the forum's closing session on the consequences of globalization among brokers and insurers.

Mr. Hudson said the creation of his company through a July 1996 merger, forming the largest U.K. multiline insurance company, also was done to improve efficiency for clients.

"I applaud my group's attempt to become more efficient in this most inefficient and occasionally unprofessional business in which we operate," Mr. Hudson said.

While he acknowledged the merger also was completed in the interests of shareholders, Mr. Hudson said the real drive was for competitive size.

"We could not make the quantum leap necessary through organic growth, and we had to reach a critical mass in certain markets," he added.

Similarly, Philippe Carle, chairman of Paris-based broker CECAR, which was acquired earlier this year by Marsh & McLennan Cos. Inc., told the audience of risk managers "we will be merging and concentrating to give you more service."

Charles Walkenaer, chairman of Paris-based AXA Global Risks, said Mr. Verbeek's account of the expansion of Aon is an equally accurate description of what is happening at Group AXA, which has made acquisitions in Europe, the United States and Australia. By next spring, it plans to finalize its merger with Paris-based insurer Union des Assurances de Paris to become Europe's largest insurance company.

From the customer's viewpoint, AXA's growth is creating "strong and solid" insurance units able to cope with any risk in terms of having the capacity to provide coverage and the ability to absorb a major loss, he said.

Rather than being damaging to clients, "size enables us to have international teams that can cope with international problems," said Mr. Walkenaer.

He, too, referred to the globalization of clients, which makes it all the more important that there are multinational and powerful insurers that "are better able to understand the incontrovertible trends in liability."

The reduction in the number of insurers through mergers and takeovers should be seen as an opportunity, not a problem, Mr. Walkenaer maintained.

"We satisfy your requirements even better than before. We'll continue to offer multirisk, multiline products," he said.

Mr. Verbeek said the advantages the growth of megabrokers provides to clients include lower prices, consistent worldwide services, access to all markets worldwide, buying power, better information and database access, an unbundled range of services, a wider and deeper skill base, and innovation from integrated operations.

The brokers denied a suggestion from a risk manager in the audience that their drive to achieve better terms for their clients might ultimately weaken insurers. Mr. Verbeek said Aon's objective is not lower prices but more efficient prices.

Aon's growth is aimed at improving efficiency, he said. "The client will no longer pay for our inefficiencies."

Mr. Carle agreed, saying that while the bigger merged entities ultimately will lower prices, it is through greater efficiency that the cost of providing the services linked with underwriting activities and of handling risks could be up to 15% lower.

However risk managers view the consolidation trend, FERMA President Hugh Loader urged them to "look for and embrace" the changes occurring globally in the insurance and brokering communities.

Risk managers should know that there's still room for improvement in insurance industry quality, and "life in the broking community is going to get tougher rather than easier," he said in his opening address.

Mr. Loader also said that despite the changes in the insurance and brokering industries, the risk manager still has to be the principal coordinator of a team bringing together all the traditional skills. The risk manager has "to think outside the box, to expect the unexpected."

The risk manager must have a contingency plans to respond to problems, such as the potential failure of a key supplier to meet the company's needs, and to be prepared for any natural disaster, warned Mr. Loader, managing director of Tetra Laval Insurance Services Ltd., part of The Tetra Laval Group of Saffron Waldon, England.

FERMA members have become more professional in all these areas, and their attendance at the Risk Management Forums helps, he said.