The bracing winds of globalisation leave few industry sectors untouched. Insurance is no exception. At the end of 1998, the UK-based Sedgwick group, Europe’s largest insurance broker and well known for its pro-active community policies in the UK, became part of the international group, Marsh & McLennan Companies (MMC). One year on, the businesses are merged and attention is turning to corporate social responsibility policies and specific community involvement activities.
MMC is a global professional services company, with 50,000 employees operating in over 100 countries. It has three main components: Marsh itself (risk and insurance services), Putnam Investments (one of the largest investment management companies in the USA) and Mercer Consulting (global human resource and wider management consulting). The last decade has seen the insurance broking industry fundamentally restructured: more than half the top twenty brokers have combined, with Marsh, Aon and Willis now dominating the top ten global listing.
Marsh in UK – the main focus of this profile – conducts risk management and insurance services for the business sector, from multi-nationals to small and private businesses, covering the full range of risks including property, casualty, professional liability and crime, along with environmental and political risk.
Community policies
On the business side, the merger involved dispassionately deciding which predecessor had the best approach, whether people, products or processes. Sedgwick’s approach to the community was known for getting practically involved in a few ‘difficult’ social issues, such as crime, offenders and homelessness, trying to engage staff and make a special contribution. Marsh’s approach in the UK, largely based on the practice at Lloyd’s broker, C T Bowring which became part of the group in 1980, was more traditionally donations based.
The result has been to keep a higher level of pure donations than Sedgwick previously, but to try to inculcate practical action across the new company, focused on the ‘difficult’ issues. As part of this process, members of the new UK executive management team will be taking part in an internal Seeing is Believing trip together in March, visiting health projects in East London. The team sees such active community engagement as important to business success and to building the new corporate culture.
Marsh employees in the UK now number some 6,700, operating from a network of around 30 offices in London and covering most regional cities across the whole UK. Inevitably mergers cause a short-term loss of momentum in the running of community relations, but the longer term prize is to gain from a more systematic approach implemented across a larger company, with growth prospects across Europe.
The policy focus is on breaking down barriers to education and training, to employment and self-employment, to adequate housing and to personal independence. The cash element of the total community contribution is around of £150,000 at corporate centre, through the charities fund and in local offices. If the employee effort and in-kind contributions are factored in, the total probably rises to around £500,000 a year.
Flagship projects
In January, Marsh sponsored the first International Forum on Drug Abuse Prevention, held in London and attended by over 100 experts from 50 countries, including UK ministers. The aim was to consider effective prevention strategies based on a review of anti-drug activity in 40 countries carried out by the Mentor Foundation.
This international non-profit agency was set up in 1994 largely by the World Health Organisation, to focus on the prevention of drug abuse by children and young people. This is a huge global problem, with 400 million abusers of illegal drugs and a trade estimated to be worth $500 billion, equivalent to 10% of international trade. In the UK alone, a third of all crime is thought to be drug related and the annual cost to public and private sectors is around £1.8 billion.
Mentor’s work is to set up national organisations, to fund pioneering projects and to promote the importance of prevention. Marsh was represented at the conference by two senior executives: Hamish Ritchie, chairman of Marsh Europe and now also responsible for MMC’s operations in the UK, and Rob White-Cooper, chairman of Marsh International. Drug abuse is seen as one of difficult or ‘risky’ social issue, not often addressed by companies but where Marsh feels it can bring a particular expertise.
Other projects in the UK include:
running a job club for prisoners nearing release from Norwich Prison, started in 1992 (which won a Dragon Award and a UK Volunteering Award);
a secondee working with Spitalfields City Farm on property negotiations and other services, while another has developed a business plan for a children’s museum;
regular employee volunteer reading in schools in East London;
plans for a GP mentoring service in Tower Hamlets Health Authority, as local doctors face similar management challenges as the head teachers already benefiting from business executives’ support.
Tower Hamlets, where Marsh’s principal UK office is situated, is a focus of activity and the company makes in-kind contributions such as offering rent free accommodation and providing payroll and other services for several East London charities.
Employees
If the effort to build social responsibility into the new culture is to succeed, employee involvement must play an important part. Already some team challenges bring together small groups to work on short-term tasks helping neighbouring community organisations. A programme of 100 hour assignments will soon enable young Marsh managers to tackle projects which develop their management skills. Payroll giving and grants for employees committing time to an organisation are already in place. The success of the Marks & Spencer inspired Children’s Promise final hour salary donation scheme (reported elsewhere in this issue) has been considerable with more than one in ten employees signed up.
The community programme is directed by Victoria Secretan, supported by a UK programmes manager, an appeals administrator and a network of contacts in the main offices outside London.
International
Rob White-Cooper is an MMC main board director and leads the whole group’s involvement with the Prince of Wales Business Leaders Forum. Historically, MMC as the parent company has preferred the greater portion of activities to be undertaken through operating companies. The main exceptions are an arts sponsorship programme in New York, where the group is headquartered, and two schemes for US and Canadian employees whatever their subsidiary company:
a volunteer grants programme offering $500 to $2,500 where there is an established affiliation with a non-profit organisation for at least a year and a minimum volunteer effort of ten hours a month;
a matched giving programme for education, dollar-for-dollar up to $3,000 a year.
The challenge now is whether, in an era of global brands and transnational clients, it is any longer enough to leave social responsibility to local discretion. The trends in other companies and in society at large, for example through agencies like the United Nations, says not. But it will clearly take time to learn and share around the group what works best and to find a new balance between central direction and local discretion.
Link to business
Marsh makes the point that, as risk managers, the company should bring its expertise to bear on risky issues. Does this work in practice? The prime example is an insurance product, originally developed by a Sedgwick secondee with Apex Trust, the charity assisting ex-offenders. Employers are notoriously reluctant to take on people with a criminal record, but the social costs are high, as offenders without jobs are more likely to turn back to crime. One reassurance is the Apex Fidelity Bond, underwritten by Lloyd’s, with Marsh acting as the broker and with premiums starting at £50 a year for £10,000 cover. Inspired by the community programme, this now operates as a commercial product, albeit one that has only limited volumes and low returns.
Looking ahead, there ought to be wider opportunities for Marsh to marry its business expertise with social responsibility, especially as the nature of the business continues to change. Moving from simple broking of insurance to managing risk, it has grown from just assessing material values – what does a burnt-down factory cost to rebuild? – to intangibles such as brands, intellectual capital and reputation. Marsh’s Risk Consulting practice already covers environmental and political risk. Now it is addressing corporate governance in the light of Turnbull, advising on systems of internal control and reporting and the procedures to imbed sound practice which the new standard requires.
There is surely an opportunity to draw on the expertise of those in the company who know most about social risks – those running the community programmes – and to broaden risk managers’ awareness through practical community assignments.
In this whole field, we have moved beyond simple assertions that doing good is good for business, with much effort now on links with business strategy and rigorous evaluation. Going further, to see corporate social responsibility as a risk management issue, will be challenging for many, although some have already found out the costs of underestimating the “significant risk” (Turnbull) which the community can pose.
A company like Marsh has a role, not just to try to be socially responsible itself, but to give a lead in debating these issues with other companies, bringing its professional expertise to bear on such a key issue.
executive biography
Victoria Secretan
community programmes director, Marsh in the UK
Victoria Secretan is responsible in Marsh for developing policy on social responsibility and for ensuring the policy is translated into practice at local level. Prior to joining Sedgwick in 1990, she had fifteen years’ managerial experience with non-profit organisations. From 1982, she was head of company relations with the Fullemploy Group, concerned with the economic development of minority ethnic communities. Before that she was a founder member of the Action Resource Centre, formed in 1973 to combine the skills and resources of business and industry in tackling local community issues, particularly unemployment.