Pulling the Plug on Marsh.

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    • Abstract:
      The article discusses the impact of a lawsuit filed by New York State Attorney General Eliot Spitzer against insurance company Marsh & McLennan. As Marsh & McLennan reels from a scandal in which it stands accused of rigging bids and grabbing kickbacks and cheating dozens, or even hundreds, of corporate clients, it will need lots of luck just to survive. On October 25 Marsh chief executive Jeffrey Greenberg was replaced by Michael Cherkasky, a former legal colleague of Spitzer's and a donor to Spitzer's reelection campaign. Marsh Incorporated already has agreed to stop collecting $845 million in annual revenue--one-third of parent Marsh & McLennan's operating profit--from the fees at the heart of the Spitzer complaint: "contingent commissions" paid to Marsh by the winning insurers for steering business their way. Connecticut Attorney General Richard Blumenthal says he is contemplating lawsuits against brokers and insurers over bid-rigging and steering business to favored insurers against the interest of buyers. Spitzer's charges paint a startling picture of Marsh brass nonchalantly ripping off clients as if it were business as usual. Supporting testimony comes from two executives at insurer American International Group, run by Greenberg's father, Maurice (Hank) Greenberg, and one at Ace, run by Greenberg's younger brother, Evan.