In The Eye Of The Storms

Just when you think Marsh might be getting its act together in its quest to overcome the fallout from bid-rigging and contingency fee abuse scandals, its CEO, Brian Storms, suddenly takes a hike or is kicked out the door. For the embattled behemoth, it's back to square one.

All the mega-brokers have been struggling to regroup to repair their tarnished reputations and replace the billions in revenue lost when they had to surrender the lucrative, volume-based bonuses that got them into hot water in the first place, as part of settlements with then New York Attorney General (now Governor) Eliot Spitzer.

But none have been harder-pressed than the mighty Marsh to regain its footing in the new brokerage world. Now, that mission becomes even more difficult–although if the right leader is put into place, this could turn out to be a tremendous opportunity for Marsh in the long run.

Mr. Storms' sometimes rocky two-years at the helm exemplified the difficulties facing Marsh.

He came up short with his biggest customer and prospect base during a panel discussion at the 2006 Risk and Insurance Management Society annual conference in Honolulu. The fee scandal was a major topic of discussion, but Mr. Storms suggested that for brokers and clients at Marsh, the controversy was pretty much behind them.

Marsh's biggest competitor, Aon, immediately got into the face of Mr. Storms. CEO Greg Case responded that “to me, this [controversy] is going to be with us for a long time. The idea that we can declare victory and put it behind us and say were good…its not going to be anything other than day to day, doing a better job.

He added that brokers need to focus on the value provided for the price that is charged. At that point in time, he added, it would be a huge mistake to declare victory.

The moderator–the RIMS president at the time, Ellen Vinck–then made Mr. Storms squirm some more by asking for a show of hands from those risk managers in the audience who agreed that this is an issue that is done and gone and over with. Out of a packed hall of over 1,000 attendees, only a few hands were raised.

This past spring, Marsh ran into a couple of more embarrassing image problems.

One was an article in the June 11 “New York Post,” talking about how Marsh's new branding campaign featured extreme close-ups of individual faces–including reflections of what looked like the Twin Towers of New York's World Trade Center in the subjects' eyes.

Marsh was understandably outraged, especially since the company lost 355 colleagues in the 9/11 attack. They hastened to point out that the double-wafer reflections was a trademark of the well-known photographer who took the campaign's pictures–Martin Schoeller–and that the reflection in question was merely of light fixtures. Marsh posted other images taken by the photographer to document its explanation, along with a letter from Mr. Schoeller's agency backing them up–but the damage was already done. No one should have to explain their ad campaign to the public.

The sad fact is–regardless of intention–the images did look like a reflection of the World Trade Center to the casual observer not up on the work of this particular photographer, and Marsh should have been more sensitive to that possibility.

In addition, the campaign itself was a bit too obtuse for my taste. It focused on “The Upside Of Risk”–not a bad topic for a broker, but the ads featured lame catch phrases, such as: “I Risk, Therefore I Am,” “When I Risk Upon A Star,” and “To Risk Perchance to Dream.”

A far more direct and effective campaign, I believe, would have simply featured the catch phrase–”Marsh: Your Honest Broker”–to overcome any residual suspicions about Marsh's integrity following the devastating Spitzer probes.

Meanwhile, back in April at this year's RIMS conference in New Orleans, Marsh had another public relations blunder after booking Al Gore to speak at its annual client breakfast. What a coup! The master of global warming to address an industry suffering the effects of souped-up hurricanes, at Ground Zero for climate change!

However, Marsh killed whatever good press it might have generated by failing to invite reporters. (The press was always welcome at this event, which in past years featured high-powered speakers such as Colin Powell talking about the war in Iraq–not exactly banal stuff!) Indeed, only by calling Marsh did I learn that per the former veep's wishes, no press coverage would be allowed.

I appealed to Mr. Storms personally at a Marsh reception at RIMS prior to the speech, imploring him to muscle the unusually camera-shy Mr. Gore to man up and allow reporters to cover his speech. I told Mr. Storms the only possible reason Mr. Gore might not want press coverage–especially when he was selling a recently published book, and perhaps even considering a run for president–was that he didn't want to be publicly associated with a firm that had been targeted by Eliot Spitzer for cheating clients.

Plus Marsh was paying a small fortune for Mr. Gore's 30-minute rubber chicken speech–the one who pays the band should call the tune, I argued.

I strongly advised Mr. Storms to give Mr. Gore an ultimatum. Either allow press coverage, or cancel his speech (and huge fee). If Mr. Gore was ashamed to be seen with Marsh, then don't bother coming. What's the use of having a high-profile keynote speaker if you can't make hay about it with the press–in the backyard of Hurricane Katrina, no less?

But the prohibition stood, and I slammed Marsh in this blog as well as in my magazine column for closing the door to the media and going along with Mr. Gore's unreasonable demands.

There have also been some notable defections during Mr. Storms' tenure, although the latest one was salvaged at the 11th hour when Tim Mahoney, CEO of North America for Marsh, resigned to move to Integro–only to return on a counter offer (after Integro had already issued a release on Mr. Mahoney's move, which had to be rescinded, much to Integro's chagrin).

Could it be that Mr. Mahoney only agreed to come back if Mr. Storms left or was shown the door? Could he be a candidate for CEO?

The only thing we know for sure is that Mr. Storms is history, for whatever reason, and Mike Cherkasky, president and CEO of Marsh & McLennan Companies, will serve as acting CEO of Marsh, leaving a huge leadership void and troubling questions over the brokerage's head until a replacement can be found.

The analysts smell blood in the water, talking about Marsh being in turmoil, long after the black cloud of the Spitzer probes was supposedly left behind the firm.

Marsh will need a dynamic leader who can reenergize this sleeping giant. The brokerage has enormous resources at its disposal, and therefore cannot be easily disregarded. However, whether the firm can survive a revolving door in its highest offices remains to be seen.