Protector of Free Enterprise

At the height of the Suez crisis, Chicago's Marsh & McLennan Inc., one of the world's biggest and most diversified industrial-insurance brokers, got a hurry-up call from the U.N. Would M. & M. take on the job of placing insurance for the U.N.'s 4,000-man police force in the Middle East against the hazards of war? Though M. & M. had never heard of such insurance being written before by a private company, it lost no time protecting the international force. Within 24 hours it had arranged for Continental Casualty Co. to write a $25,000 accidental-death-and-dismemberment insurance policy for each U.N. soldier, plus $1,900,000 worth of war-risk insurance on each of three Swiss airline transports.

The U.N.'s special insurance problem was all in a day's work for Marsh & McLennan. "We insure anything," says President Herman Dunlap ("Dutch") Smith. Like Lloyds of London, M. & M. has grown big (2,720 employees, offices in 29 U.S. and foreign cities) by never turning down an acceptable risk, will as gladly work out insurance for a $20,000 cotton shipment as a $2,000,000 offshore oil-drilling rig, or a $20 million pipeline. While M. & M. does not carry the actual fire, casualty, loss, or accident insurance itself, it acts as an expert broker, helping companies place their insurance as cheaply as possible. One result of such diversification is that while many casualty insurance firms hit rocky going in 1956, M. & M. wound up its best year, handled total premiums worth hundreds of millions, totted up gross revenues of more than $20 million from commissions and other services, and a big (though traditionally secret) profit 25% better than 1955.

Coattail Rider. The secret of M.&M.'s success is that it decided early to tie itself to U.S. industry's flying coattails, and provide the kind of risk-cutting insurance businessmen needed. "Our free economy," says President Smith, "is based on the confidence that comes from insurance. If it weren't for insurance, a man would be mighty reluctant to risk lending a dollar, nobody would be eager to drive a car or build a home."

When Marsh & McLennan was founded in 1871, insurance policies were still written in longhand, and the agent rash enough to book as much as $5,000 subject to a single loss was nicknamed "jumbo." But Henry W. Marsh, an agile, fast-talking supersalesman, and Donald R. McLennan, a careful technician who knew how to make salesmanship pay off, soon changed all that. M. & M. advised the Moore Brothers' Diamond Match Co. and National Biscuit Co. empire, won the insurance account for what later became U.S. Steel, convinced the Great Northern Railway that it should place its first comprehensive insurance schedule covering all the road's operations. Going into marine insurance, it helped change the entire meaning of the term to cover virtually any cargo that was moved and stored, whether by land or sea. And for every customer, M. & M. did its best to cut costs, helping them to take more insurance at lower rates. In the years between 1910 and 1930, giant A. T. & T. boosted its insurance from $52 million to $770 million, in no small measure because M. & M. was able to help it reduce its average premiums from 67-c- per $100 of insurance to 10-c- per $100.

Eggheads & Debtors. M. & M.'s President Dutch Smith is cut from the same pioneering pattern as M. & M.'s founders. Starting out at M. & M. in 1928, he soon made a name for himself as what colleagues call a "hardboiled egghead" (Phi Beta Kappa, Harvard '21) at a time when most of the U.S. "kicked the insurance man around as a congenital fathead.'' Working first as an investment manager, later as head of M. & M.'s Chicago sales staff, he worked with the top executives to help the company pioneer half a dozen new fields through the years--group life, health, and accident plans for U.S. companies, liquor-liability insurance to protect tavern owners from damage done by obstreperous drunks, freezer insurance to protect owners from food spoilage in case of power failures, debtor insurance to protect retailers in case installment buyers die before paying up.

As president since 1955, Insuranceman Smith, who was one of the original Stevenson backers in 1952, has also helped build up M. & M.'s pioneering business of acting as trustee for union pension funds. M. & M. now administers 17 separate union funds covering 100,000 workers, with contributions from 3,000 companies. Dutch Smith is now exploring one of the most exciting new insurance fields--protection for atomic-power plants. He has already helped set up a pool of companies to write insurance up to $60 million on a single reactor. Soon President Smith will swing off on a tour of South America to boost M. & M.'s business still more. Though the company already has an office in Venezuela, he wants to expand to other Latin American countries, where he hopes to help businessmen grow by protecting their investments and lowering their risks.

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