Insurance brokers, whose images and share prices have both plunged in a fees scandal, will struggle to make up the hundreds of millions of dollars in revenues they have lost by ditching controversial fees.
It is less than a month since New York Attorney General Eliot Spitzer announced he had launched an investigation into practices in the insurance business and had sued Marsh & McLennan Cos., the world's number one broker, for suspected rigging of quotes for cover.
But in that short time many brooking firms have caved into pressure from regulators and outraged clients and have abandoned taking so-called "contingent commissions", in spite of initially defending them as a common practice in the industry.
Brokers have been left in shock by the speed and strength of the whirlwind of adverse publicity unleashed by Spitzer's probe.
Renewal negotiations of some annual risk cover contracts are running late because there is "chaos at the top" of the big brooking firms, one industry player said.
Ditching such fees, paid by insurers based on the volume or profitability of business placed with them, has forced brokers to completely rethink how they get paid for their services.
Nigel Barton, Chief Executive of Oxygen, a new broker operating in the London market, said that now brokers "will have to disentangle old practices and old revenue models ... A lot of services get paid for in a single bundled-up commission."
But with insurance prices - and therefore broker commissions - already falling, the big brokers are under immediate pressure to find ways to make up the revenue lost by dropping contingent commissions.
"Brokers don't seem to have any idea right now how to make up these revenues," said Thierry van Santen, President of Ferma, which represents European corporate insurance buyers. "They have no back-up plan."
Big brokerages may have to resort to swingeing cost cuts to mitigate some of the impact of the hundreds of millions of dollars they have lost, said Barton.
But the industry has been notorious for its reluctance to embrace technology to improve operating efficiency, so saving money is likely to entail cutting staff numbers, he said.
"Brokers have got to work out where their real strengths lie," said Barton. "If I were the head of a big brooking house I'd be concentrating on the five areas in which you're a world beater. Those areas where they're also-rans would be cut out fairly quickly, I would imagine."
But opinion is mixed on whether or not the greater transparency in buying and selling cover created by the changes will lead to more competition in insurance brooking.
Van Santen said he didn't think competition for the accounts of very big corporate clients would increase greatly. "We only have three global brokers (Marsh, Aon Corp and Willis Group Holdings)... who have the capabilities to handle world-wide insurance programmes."
But smaller brokers could get a boost, he said. "Before they were a little out of the game, because the power of the three big brokers on global insurance companies was so high."