Nobody ever accused Willis Group CEO Joe Plumeri of being the shy, retiring type. In the six years he's been at Willis, he initially focused on that "vision thing," transforming what's been called a sleepy, British broker into what's probably the most aggressive insurance broker in the marketplace today. A former baseball and football player, he sounds more like a coach exhorting his team to win than the more traditional brokerage executive.
Plumeri, who grew up in a hardscrabble neighborhood on the north side of Trenton, N.J., came on board Willis in October 2000 after "retiring" from a 32-year career at Citigroup, working with legendry financial executive Sandy Weill. When investment bankers Kohlberg Kravis Roberts & Co. brought him in to run Willis, Plumeri quickly announced in an interview that he wanted Willis to become the No. 1 broker--a challenge that probably provoked more than a few chuckles from the brokerage establishment at the time.
Yet, late last year, the brash Plumeri almost pulled it off amidst reports that he had lined up support from his investment banking buddies to make a bid to buy out No. 1 broker Marsh & McLennan Cos.
The irony wasn't lost on the sharpest of industry insiders. Here was a man, who was not even trained as a commercial insurance broker, who turned around a moribund London shop and almost bought out the world's leading insurance brokerage firm, the white-shoe MMC.
MMC wouldn't have anything to do with that offer, but it may have been among the factors that motivated Marsh to put its Putnam investment subsidiary on the block. But don't count out Plumeri yet. Today, Willis, under Plumeri's leadership, is clearly on a roll.
Plumeri has been outspoken in his support of the policy of banning contingent commissions and has been a vocal advocate of financial transparency in the wake of the government investigations of the major brokerage firms.
In doing so, he's created some controversy among smaller agents and brokerage firms that insist on retaining the practice. He's passionate about issues like transparency, and he pulls no punches when talking about issues that affect the value that a client gets from Willis.
Indeed, he's outspoken on a whole range of industry issues, cultivating a leadership position among his peers in the industry. He was just honored in January as the insurance leader of the year by St. John's University, one of the few people so honored who didn't spend their entire career in insurance.
At the dinner in January, Plumeri continued to challenge his colleagues: "From this night forward, let's take our game to a higher level of compliance and higher standards of service." Then he added, "We have to hold ourselves to higher standards that get higher and harder to attain every day."
As Willis enters a new chapter under Plumeri's management, he's been, by all accounts, successful in transforming Willis during his tenure. The company continues to grow at a rate of about 12 percent annually since he took over. Client-retention levels have improved, costs and expenses are under control, and margins have improved significantly.
Now Plumeri's set his sights on the next five years and plans even stronger growth and more profitability. The challenges, however, are significant, especially in a business known for its cyclical nature.
In the near term, the industry and Willis face declining insurance rates from the soft market, continued regulatory scrutiny, shifting client loyalties, stiffer competition for recruiting the best brokers (and new challenges to keeping successful brokers on board), and the changing landscape of risk, which includes severe and more frequent catastrophes.
Willis, which describes itself as the only "pure" broker among the industry's global players, ranks third in global revenues behind Marsh and Aon. Plumeri, with a kind of Vince Lombardi style of leadership, has transformed the operation from a lackluster, insulated firm into an aggressive, growth- and performance-oriented operation.
That's an incredible turnaround over a relatively short period of time for a firm that had the reputation of operating like a British gentleman's club. The almost mythic story at Willis in the "pre-Plumeri era" was that brokers had to submit names of proposed clients to the London headquarters, where a special management committee would decide whether the client was worthy of working with Willis.
That attitude is gone, replaced by what is probably the strongest sales culture among the largest brokers. Plumeri approaches his job with the zeal of a missionary.
When Plumeri arrived at Willis, he did a number of things to shake up the culture. Plumeri made sure everyone there had Willis lapel pins--and that they wore them. Reportedly, he bought more than 33,000 lapel pins. It was one of his ways of emphasizing that he coached the team, with emphasis on team.
He likes to talk about how hard the brokers work together and how hard they can play together.
He went out and recruited more than 1,000 new brokers and made a number of key strategic acquisitions of smaller brokerage firms, especially in markets that management identified as critical to the longer-term success.
Willis had seen hard times, which reached their height in 1999 with a loss of $104 million. Revenues were stagnating then at around $1 billion while expenses continued to escalate.
But after Plumeri's arrival, fortunes reversed. Revenues jumped to more than $2.2 billion in 2005, which translates over his tenure to an increase of more than 80 percent. The 2006 figures should show a comparable annual increase.
During his first five years, Plumeri and his team built up key industry practice groups, many of which have strong representation among the Power Broker listings. Clients, under this system, work with a particular broker rather than trying to figure out who should be responsible for their account.
Insurance, Plumeri said, is "the DNA of capitalism. It's the fabric of commerce and the fabric of a community. It is not just an industry or a business--but is a fundamental responsibility to the community."
Never shy about delivering speeches in a crescendo approaching that of an impassioned Roman orator, Plumeri touted insurance as a necessity to protect people and property. Insurance, he said, is a cornerstone of prosperity, and there's only one way to offer insurance: through value and service.
Willis has targeted three key segments for future growth: employee benefits, the professional services market and the energy brokerage markets.
Willis also plans to increase its penetration of the middle-market business, as well as build on its base of Fortune 100 clients to increase its national market penetration.
Plumeri explained in an interview last fall that a key part of his plans for further growth and profitability is the expansion of an initiative he calls "client advocacy."
Each client will have a separate "client advocate" at Willis who can expand the relationship between the firm and the client by understanding client needs better and advocating for those needs within the Willis organization.
Client retention levels have been growing at Willis, and Plumeri expects to see the retention rates continue to increase.
In particular, Willis has set "increasing the share of wallet and market share in the largest global accounts" as a key part of its future growth, called the "Willis Global 1000 Initiative."
Today, Willis is known for its industry practice groups in the construction, financial institutions, hospitality and gaming, life sciences, real estate, fine arts and entertainment, and health care markets, among others. The focus on that industry expertise remains a key part of Willis' formula for growth.
Plumeri has also invested heavily in improving the technology platform for the Willis organization.
And last year, on the carrier side, Willis announced the "Willis Quality Index" as a way to benchmark insurance carriers in terms of the level and quality of service and support to their clients.
The index looks at carrier performance and responsiveness of service from underwriting through the process of issuing a policy and a claims check.
Plumeri acknowledged that the changes in the insurance industry in the past few years might be seen as revolutionary, but he insisted that Willis has embraced them and that this will give Willis an edge by providing more value to clients. If there's anything that Joe Plumeri is passionate about, it's client value.
JACK ROBERTS is editor in chief of Risk & Insurance®.
February 1, 2007
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