Marsh & McLennan to axe 750 UK jobs after fees row

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Marsh & McLennan, the world's largest insurance broker, is planning to axe about 750 jobs in Britain.

Marsh & McLennan, the world's largest insurance broker, is planning to axe about 750 jobs in Britain.

The cuts are part of a massive global redundancy programme implemented by Marsh after US regulators forced it to stop charging controversial commissions from insurers.

The UK jobs will be lost as part of the 5,500 global cuts already announced by the company. It aims to reduce costs by eliminating overlapping functions and centralising back-office jobs such as claims administration, policy issuance and invoicing. The New York-based company has 40,000 employees across the world, including 6,000 in the UK.

The cost-cutting measures come after Marsh agreed to pay $850m (£450m) on 31 January to settle charges brought by Eliot Spitzer, New York's attorney general, that it rigged insurance bids.

Mr Spitzer found that the firm took commissions, called "contingent commissions", from insurers for directing clients' business their way.

A report by the law firm Freshfields commissioned by Marsh found no evidence of similar price-fixing in its UK operations, but said staff were sometimes pressured into trying to extract fees from insurers when placing business with them.

Marsh plans to charge some UK insurers, including Lloyds of London, 0.75 per cent of premiums for its services, but admitted that it is struggling to get them to agree to such fees, which would include the cost of issuing a policy document.

Marsh's UK division also said yesterday that it had reached agreements in principle "with a number of leading insurers" who no longer pay it"contingent commissions". It wants property and casualty insurers to cut premiums charged to clients brought to them by the brokerage by between 1 and 2 per cent.

In October Marsh scrapped contingent commissions. It said yesterday: "Traditionally, insurers recognised the value of the Marsh network by means of contingent commissions. ... Insurers are continuing to receive value but not paying for it. We believe this value should be recognised but that the beneficiaries should be our clients."