Global broker Marsh has unveiled its business model for the future, and it involves higher fees and commissions.

Marsh & McLennan President and CEO Michael Cherkasky says the changes at Marsh will include a standardised rate card for commission-based accounts.

Marsh will also move out of small commercial accounts (less than $50,000) on which it won’t be able to make money under the new regime. However, it has since indicated it will provide brokerage services to small clients “on a limited basis”, mainly through its Texas “service centre”.

Marsh will also quit unprofitable large accounts which aren’t prepared to pay the new fees. The measures are intended to be followed by all Marsh companies around the world.

The announcement on the changes came after Marsh & McLennan announced a profit of $180 million for last year – down from a 2003 result of $1.5 billion – and a shedding of 2500 more staff.

Mr Cherkasky says the standardised rate card has been shown to clients. It sets out charges that will be imposed for the placement of a given type of coverage. “They will be a standardised charge and they will be fully disclosed to our clients.”

While the rates will be higher than in the past, they “will still be at the lower end of the market”.

“We think we provide more value than any other broker in the world,” he said. “We need to get closer to what the market charges. We will try to do that in an appropriate and fair way.”

The smaller accounts – which were basically carried by Marsh’s contingent commissions deals with insurers – will have to go, although Mr Cherkasky says some clients may choose to stay by paying higher fees. “It’s going to be a conversation where we’re saying, ‘this doesn’t work for us and we’re going to try to help you find a broker for whom it does work’.”