As another scalp is claimed in the US, most in the UK industry are unaffected, says Christine Seib
If the old wives' tale is true, Eliot Spitzer's ears must burn like hell when the Greenberg family gets together. First, the ambitious New York attorney general hounds Jeffrey Greenberg out of the top seat at Marsh & McLennan by alleging dodgy dealing on commissions.
Next, Spitzer prises Jeff's father, Maurice Greenberg, out of the chief executive job at AIG, a position he held for more than 40 years, by putting the wind up AIG's directors over the potential illegality of insurance contracts signed a few years ago. No doubt, Evan, the younger Greenberg brother, is also sweating a little, particularly as the Bermuda insurer he runs, Ace, got a mention in the Marsh lawsuit and has attracted interest from the Securities and Exchange Commission.
And the pain does not yet look to be over. Maurice is still non-executive chairman of AIG and is expected to find it difficult after so long in charge to hand over the business to his replacement, Martin Sullivan. There is speculation, however, that this will not be the case for long as it is thought that investors will pressure Greenberg to retire at AIG's general meeting in May.
So what happens once Spitzer has wrung everything he can from the Greenbergs? Well, there are dozens of similar investigations currently being conducted by attorney generals and regulators in several US states so this could drag on for a while.
Meanwhile, Michael Cherkasky, the new chief executive of Marsh & McLennan, will continue to get plenty of wear out of his hair shirt. As one acerbic observer of Mr Cherkasky's speech at the recent Insurance Institute of London lunch put it: "He managed to get the words 'Marsh' and 'clean' into it about 48 times."
And less sizeable players will continue to take advantage of the fall from grace of the world's most prominent insurance brokers. As Grahame Chilton, the chief executive of Benfield, the reinsurance intermediary, pointed out last week, he is going to have to take on new staff to cope with demand.
Apart, however, from the thrill of seeing the mighty fall, the whole thing looks unlikely to have much effect on the vast majority of UK brokers and insurers. This is partly because, other than those directly involved in the "earthquake" currently hitting the insurance market, as Andrew Beazley, chief executive of Beazley, described it last week, no one has to change.
Despite protestations from Lloyd's chief executive Nick Prettejohn last month and Robert Hiscox's harsh words at his firm's annual results last week, the FSA has declined to lay down the law on commissions or, as far as a layman can tell, finite reinsurance contracts.
It is unusual, and commendable, for key industry players to be crying out for clearer rules on what is acceptable. However, I can see why the FSA may be reluctant to act before it sees how the situation in the UK pans out.
Had it been too prescriptive too quickly, the howls of anguish from the insurance market would have been audible for miles. IT
