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MONTE CARLO, Monaco-Insurance brokers, even those that bulk up via mergers and acquisitions to better serve their multinational clients, should not be lulled into believing their services are indispensable, a risk manager says.

Hugh Loader, president of the Federation of European Risk Management Assns., says it is quite feasible for multinational companies to handle their international programs without brokers.

However, he acknowledges that capability depends on the experience of the risk manager, the size and competence of his or her staff, the multinational's corporate policies, and the regulations of the countries in which it operates.

Additionally, if a risk manager is to operate without a broker, he or she must be comfortable drafting a master insurance agreement, added Mr. Loader, who also is managing director of Tetra Laval Insurance Services Ltd., part of The Tetra Laval Group of Saffron Waldon, England.

Speaking at a session on the value of broker services at the biennial Risk Management Forum sponsored jointly by FERMA and the Risk & Insurance Management Society Inc. of the United States and Canada, Mr. Loader told risk managers in attendance that "the major insurers can provide you with the service that you are probably looking for."

Furthermore, he said, "the risk manager is in the best position to sell to the insurance market the risk of his or her corporation."

Regarding claims handling, "If the risk manager knows his own business, then I believe he has most of the expertise in-house," Mr. Loader said.

He said, however, that there certainly are occasions when a broker can provide useful services.

In some countries, such as the United States and Canada, a representative may be needed to help get contracts signed, and this could be a broker, Mr. Loader said.

"If you use a broker.*.*.the broker must add value to the relationship," he said.

Manfred Swysen, risk manager for Georg Fischer A.G., a Schaffhausen, Switzerland-based engineering group, said his company uses brokers worldwide to handle the insurance program for its 140 subsidiaries in 40 countries, "but as much as possible on our terms."

Georg Fischer's practice over the past five years has been to "hand pick" one broker per country engaged on an individual contract basis, largely to be able to know the brokering firm and the team personally, he said.

Addressing broker globalization, Mr. Swysen said due to the system Georg Fischer has in place, it is not much affected by the megamergers of brokers.

However, he said he could see where integration problems of the merging brokers and changes in their brokerage teams could annoy customers and disrupt service.

Mr. Swysen also said he could imagine clients of the megabroker being subject to new pressure to pay higher commissions at the same time the broker is exerting pressure on insurers to accept lower premiums. However, these two pressures should balance out and result in no net cost increase to policyholders, Mr. Swysen said.

Jean-Baptiste Lizot, risk manager for Paris-based agricultural products Groupe Eridania Beghin-Say, said large multinational companies often need assistance with the risk management function, which the broker can provide.

Commenting on the pros and cons of using a broker as a consultant on a fee-for-service basis, he said this is an issue his company is studying.

Groupe Eridiana's analysis will take into account the fact that, for placing coverage, the intermediary typically is needed for only two to three months a year prior to renewal.

Even then, he added, "we want to talk directly to the people providing the capacity: the insurers."

Employing a broker's services can be important in "the right quantity, at the right time and at the right price," he said.