OVERVIEW: Competition in the insurance industry is fierce, which spells bad news for insurance brokers like Aon Corp. Based in Chicago, Aon charges commissions for linking insurers with their clients.

According to the Council of Insurance Agents & Brokers, insurance rates have fallen steadily for more than three years and are now slipping at a rate of roughly 9 percent per year.

This has made it difficult for brokers like Aon to win business, because insurers are loath to pay brokers more while charging clients less.

David Small, an analyst with Bear Stearns, said many brokers are cutting fees amid the competition, which eats into profit margin and makes it hard to retain customers.

EXPECTATIONS: Analysts polled by Thomson Financial forecast profit of 59 cents per share on revenue growth of 5 percent, to $2.26 billion.

ANALYST TAKE: Meyer Shields, an analyst with Stifel Nicolaus, wrote in a client note Aon has done "a truly remarkable job of turning around what had long been an underperforming company."

Citi Investment Research analyst Keith F. Walsh said that with expanding revenue growing tougher, the best way for brokers to propel profits is to cut costs. Aon has done a good job of that, he said, and has also expanded its market share by realigning compensation.

WHAT'S AHEAD: Aon's biggest competitor, Marsh & McLennan, is struggling. The broker never figured out how to replace revenue it lost in a settlement with former New York Attorney General Eliot Spitzer, and the company is restructuring and laying off employees.

As part of the settlement, Marsh agreed to stop collecting "contingent commissions," which contributed half of the company's profit.

Michael Paisan, Shields' fellow analyst at Stifel Nicolaus, said Aon has an opportunity to win some of the business Marsh is losing.

SHARE PERFORMANCE: Aon's stock gained 5.2 percent during the third quarter to close September at $44.81. The shares finished Monday's trading at $45.34.