No one would be crazy enough to say that being raked over the coals by New York Attorney General Eliot Spitzer was the best thing that ever happened to their firm. Still, Brian Storms, entrusted with recreating Marsh, believes the harsh spotlight of Mr. Spitzer’s bid-rigging and contingency fee probe “forced us to step back and ask how we’ll compete going forward,” creating an “opportunity” to reconnect with customers.
“When you lose close to $1 billion in revenue and are forced to confront your clients in a way you never did before, out of necessity you have to take some pretty draconian measures,” Mr. Storms said during an exclusive interview in his New York headquarters.
At first changes were made in Marsh’s standard operating procedure because “we had a gun to our head”–referring to Mr. Spitzer’s settlement terms–but Mr. Storms, who took over as chairman and CEO last September, added that reports of Marsh’s demise were greatly exaggerated. “We were not damaged beyond repair, and we’ve since made a sea change in our way of doing business that goes way beyond giving up contingency commissions and making the brokering process more transparent.”
Indeed, he added, “in hindsight, I look at how well we’re doing in retaining business and key people. Sure, we lost some clients and some employees, but we’re now back to pre-2004 retention levels.”
Mr. Storms still bristles a bit over the “piling on” he endured in Honolulu during a panel discussion at the Risk and Insurance Management Society conference, when he indicated that for Marsh clients, the Spitzer controversy was no longer a factor. His fellow panelist, Aon’s president and CEO, Greg Case, rejected any attempt to “declare victory and put [this] behind us.” Former RIMS President Ellen Vinck next asked for a show of hands on the subject, finding little support for Mr. Storms’ assertion.
But Mr. Storms sticks by his original statement, explaining he was speaking only about his firm, not the whole industry–citing an independent study Marsh commissioned showing that “our clients have put the issue of our integrity behind them. It is simply not an impediment to doing business with us.”
Mr. Storms was more eager to talk about his effort to “transform” the organization into what he calls “The New Marsh,” citing two fundamental changes. One is to fully integrate Marsh’s operations worldwide–in part by upgrading its technology infrastructure (“one of our Achilles’ heels”) to leverage “decades of data”–a big change from when Marsh branch offices and sister companies did their own thing.
Second, Mr. Storms wants to move Marsh beyond risk-transfer brokerage into risk management, becoming a full-service purveyor of “data and knowledge” as well as insurance–on an a la carte basis. “We’re consulting on enterprise risk, pandemics, terrorism, climate change and supply chain risk, and we’ve monetized all of it,” he said.
All changes were made based on extensive feedback from customers and employees, he added, noting he’s been “living out of a suitcase”–spending half his time in “prospect, client retention and customer relationship meetings.”
Marsh’s resilience does not surprise me. As the New York Yankees of insurance brokerages, Marsh has the global brand, deep pockets, intellectual resources and competitive drive to stay on top. Instead of crippling Marsh, the Spitzer debacle reenergized the beleaguered firm, while giving Mr. Storms the ammunition and momentum he needs to change the culture of an outfit so large and set in its ways. No pain, no gain.