Willis wins Fortune account from Marsh
Willis’ hopes that it may be the main beneficiary from any client fall-out at Marsh were boosted last week with the revelation that Fortune brands – a company named in Spitzer’s 14 October lawsuit – appointed Willis to replace the world’s largest broker.
Fortune Brands – which owns products as disparate as Jim Beam bourbon and Titleist golf balls – said it will replace Marsh with Willis for policies that renew on 1 January.
According to Spitzer, MMC asked ACE Insurance to provide a higher insurance tender for Fortune Brands, after originally bidding a premium of $990,000 so that the current incumbent AIG would not lose the business. Following the request, ACE upped its quote to $1.1mn and an ACE assistant vice-president e-mailed their colleague with an explanation: “Original quote $990,000...We were more competitive than AIG in price and terms. MMGB requested we increase premium to $1.1mn to be less competitive, so AIG does not loose [sic] the business.” Spitzer suggested this collusion would also benefit ACE because Marsh Global would return the favour by ensuring they also won or retained lucrative accounts.
According to US insurance attorney Neal Brendel, a partner in Kirkpatrick & Lockhart's insurance coverage practice group, MMC may have difficulty in retaining many of its clients. "If companies find that their trust has been abused and if they have the time and options to make changes they will probably move," he explained.
“Until now, how a company bought insurance wasn't a big focus of top management, [but] at many companies, this issue has come to the attention of board members," he added.
MMC’s new chief executive Michael Cherkasky revealed that the broker’s client retention rate in October was only down “slightly” but, as Brendel explained, this may suggest little because many brokers would already have begun their 2005 policy renewals with Marsh and would probably wait until the process was completed.