New York–The head of a brokerage formed in the wake of New York Attorney General Eliot Spitzer's probe of the insurance business told an industry meeting yesterday that official scrutiny has left the sector better off.

Robert C. Clements, chairman of New York-based Integro, Ltd., said Mr. Spitzer's investigations of brokers' contingent commissions on commercial insurance placements helped “accelerate” the creation of Integro by tapping dissatisfaction among carriers, clients and individual brokers with the mega-brokers, primarily Marsh and Aon.

Mr. Spitzer's probe led to civil charges, eventually settled out of court, that Marsh and Aon rigged bids in exchange for hidden insurers' commissions.

Integro was founded last year by Mr. Clements, who was a principal in Arch Capital, and two former Marsh executives, Roger Egan and Peter Garvey. The firm when it started up said it would be unencumbered by “traditional processes and technology.”

Mr. Clements spoke during a joint meeting of the Association of Professional Insurance Women and the New York Chapter of the Chartered Property Casualty Underwriters Society here.

The Integro executive said consolidation of insurance brokerage firms within the past few decades has not been for the better. The mega-brokers, said Mr. Clements, created an environment where they were doing too much with too many products and too many customers, which was not in the best interest of their clients.

“Integro is about dealing with one segment,” said Mr. Clements. “We are dealing in the high-end risk management field. These clients have a different set of needs. These clients need a broker to deal with their narrow needs.”

Integro was formed, he said, to take advantage of growing insurer and customer dissatisfaction and revelations of impropriety among major brokers.

“There was evidence that insurers were yearning for additional distribution; that clients were looking for more choice; and clear evidence that the capital markets sensed a great opportunity,” said Mr. Clements.

“Most importantly,” he said, “many individual brokers became frustrated in their career situations due to the fallout from the New York attorney general's investigation into unprecedented compensation practices and bid-rigging.”

According to Mr. Clements, “Most brokers were unaware of the activities alleged to be committed by their firms. And this has become a source of distress, embarrassment and, in general, the diminution of professional practice.”

Mr. Clements told the audience that the capital markets' interest in funding his operation was spurred by the attorney general's investigation.

He told National Underwriter later that Integro would have been created without the investigations, but Mr. Spitzer's work helped accelerate creation of the firm.

Mr. Clements said Integro is unique in that it was created through funding from capital investors and not insurers or brokers looking for markets. He said investors have recognized the value of creating an organization free of legacy issues and versatile in its management structure.

“Insurance brokerage is a terrific calling in its own right, and we are creating a home for brokers and their clients to come to,” Mr. Clements remarked.

He added that the firm is “not necessarily” looking to become the largest broker but to, within five years, at least become one of the most influential brokers in the industry.

Special Reports /

Integro Chairman Gives Spitzer Credit For Shake-Up

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