This Global Disclosure Policy addresses all reinsurance placed by Guy Carpenter and accounts for differences in business practices and customs that exist in various regions of the world.
At Guy Carpenter, our brokers seek to make reinsurance placements that are in the best interests of our clients, based on our discussions with each client and our decades of experience in the reinsurance market. The factors we believe are relevant to consider with regard to placement include not only price and coverage terms but also the financial strength of the reinsurer(s), their commitment to providing this type of reinsurance for more than the immediate term, their responsiveness in paying reinsurance claims, their other services provided and other factors that the client may consider important in the particular circumstances.
Reinsurance Disclosure Policy
In order to ensure transparency with regard to reinsurance transactions, Guy Carpenter has implemented the following procedures:
- When Guy Carpenter is appointed broker of record, we will disclose to our clients the compensation that we anticipate receiving for the services to be provided on the client’s behalf by providing a copy of this Global Disclosure Policy.
- Prior to subsequent renewals of reinsurance contracts, Guy Carpenter will review with our clients any expected material changes to standard brokerage rates.
- While consistency in the terms of placements and total premiums charged to our client often is considered by our clients and us to be preferable, that is not always achievable. In such instances, we will discuss with our clients how we should proceed with any market proposals.
- On treaty placements, a summary of all formal and final quotes and declinations received from markets will be sent to clients before binding. Brokerage for each reinsurance transaction will be listed on the Cover Note (or equivalent).
- Due to the fast-paced, transactional nature of facultative placements, brokerage rates for a given transaction may not be determined until after the placement is finalized.
- Should Guy Carpenter earn less than the rates below on a particular placement, we will not report it to clients. However, if Guy Carpenter earns more than the rates below on a given placement, or if an individual market offers more in a quote or at binding, we will disclose it to the client as soon as practical.
Rates of Brokerage
Guy Carpenter’s longstanding practice is to charge rates of brokerage consistent with industry custom and practice. Below are the rates of brokerage that apply to the majority of business placed by Guy Carpenter. These rates are guidelines and are generally the norm in the marketplace, but they can vary depending on the details of a particular placement.
- On treaty pro rata placements, Guy Carpenter generally earns brokerage of 2.5 percent of gross premium.
- On treaty excess of loss placements, Guy Carpenter generally earns brokerage of 10 percent of gross ceded premium. When excess of loss placements are made with the help of another broker to access particular markets or geographies, Guy Carpenter and the other broker generally earn total brokerage of 15 percent of gross ceded premium. A Guy Carpenter-affiliated broker is often used on these placements.
- In some markets, Guy Carpenter receives brokerage of up to 5 percent on reinstatement premiums.
- On some treaty placements, a stated margin is part of the premium. In such cases, Guy Carpenter generally earns 20 percent.
- For facultative placements (except United States Casualty and Property Facultative business), the standard maximum rate that Guy Carpenter will earn is 15 percent of ceded reinsurance premium.
- For United States Casualty and Property Facultative business, the standard rate Guy Carpenter will earn is 10 percent of ceded reinsurance premium.
- On some facultative placements, a local or wholesale broker may be used to access a particular market. In such instances, Guy Carpenter and the other broker generally earn total brokerage of 20 percent of ceded premium. A Guy Carpenter-affiliated broker is often used on these placements.
Additional Disclosures
As is well known and commonplace among intermediaries in our industry, markets for our clients’ placements are often themselves clients of Guy Carpenter. On those occasions where Guy Carpenter is placing an account-specific retrocessional placement behind a reinsurance placement, we will disclose this to our original client.
A listing of those insurance or reinsurance companies in which our parent company, Marsh & McLennan Companies, Inc. (MMC), has an equity interest is available here.
Guy Carpenter will provide additional information regarding its compensation, upon client request.
Fee-based Services
In addition to traditional reinsurance intermediary services, Guy Carpenter also provides other “non-traditional” services for which we receive fees. Revenue from these activities represents a small percentage of Guy Carpenter’s annual revenue. Additional information on these activities is available upon request.
Interest Income
In accordance with common practice and general custom within the reinsurance business, Guy Carpenter retains interest earned on fiduciary funds passing through our systems. Providing Guy Carpenter with an order to place reinsurance is considered consent to retain this interest income. When requested by our clients, however, we will obtain written agreement to retain such interest income.
Trade Sanctions
Across the globe, a growing number of trade sanctions laws (adopted by the EU, US, UN, and other countries) can affect the placement of reinsurance and the payment of premiums and claims. These laws are complex and, often, can change during and after the policy period. For certain classes of business, it is becoming increasingly common for reinsurers to impose a sanctions exclusion clause, which states that the reinsurance cannot respond where coverage or payment of a claim would expose reinsurers to sanctions penalties.
As an intermediary, we also have to safeguard our position to ensure we comply with the laws and regulations that apply to us. Accordingly, Guy Carpenter cannot provide any services or provide any benefit to any party to the extent that the provision of such service or benefit would expose Guy Carpenter to any sanction, prohibition or restriction under United Nations resolutions or the sanctions laws or regulations of the European Union, United Kingdom or United States of America. In the event that any risk fails to comply with the sanctions laws applicable to Guy Carpenter, we will not be able to undertake any role relating to that risk (including placement, processing, administration, or any communications relating to such risk). In that event, we will of course inform you of the position as soon as possible.
Data Protection
Guy Carpenter complies with all data protection laws applicable to its business. Guy Carpenter will only collect and handle personal information relevant to its provision of services. More information about Guy Carpenter’s use of personal data is set out in the Privacy Notice available at http://www.guycarp.com/privacy-policy.html.
Compensation Disclosure and Financial Condition
This Global Disclosure Policy is provided by Guy Carpenter for general information only. The information contained herein consists of guidelines which do not affect the contractual terms and conditions governing a particular reinsurance transaction.
Guy Carpenter strives for transparency in all areas for its clients. Upon request, Guy Carpenter will provide a report showing the annual compensation it earned in the previous year on a client’s business.
In order to provide further financial information and comply with certain regulatory requirements, Guy Carpenter’s annual financial results are available in our consolidated corporate group Annual Report, which is available at www.mmc.com, under the “Investors” link. Guy Carpenter makes these reports available in this manner in lieu of physical mailings.
If you have any questions or concerns, or would like additional information, please contact Guy Carpenter Compliance at compliance@guycarp.com.