By Devin Leonard

(FORTUNE Magazine) – IT'S BEEN A BRUTAL YEAR FOR THE world's largest insurance brokers. Marsh & McLennan, AON, and Willis paid millions of dollars to settle New York attorney general Eliot Spitzer's charges that they steered business to insurers that paid them special commissions. Now the Big Three have another worry: Dozens of their top executives are jumping to a new rival that is being launched to take advantage of the turmoil that Spitzer has created in the market.

In May, Robert Clements, a renowned figure in the insurance industry and a former president of Marsh & McLennan, announced that he and two other ex-Marsh executives had raised $320 million to create Integro (from the Latin word that means "to renew or to make better"), which will compete for large corporate accounts. Although it has yet to announce the name of a single client, Integro has hired almost 100 employees, most of them practicing brokers cherry-picked from its three scandal-plagued peers. It expects to hire away 400 more by next July.

Clements, the new company's chairman, spent the 1980s and early Nineties overseeing Marsh's worldwide brokerage operations. He says brokers are flocking to Integro because they are disillusioned with the ethical lapses at their old firms. "Our objective was that Integro would be viewed within the brokerage community as a lifeboat," he told FORTUNE. "We wanted to take people who didn't have any obligation to go down with the ship."

During his stint at Marsh, Clements became famous for using the company's muscle and deep pockets to set up a string of successful insurance providers in Bermuda--including ACE Ltd. and XL Capital. To raise money for Integro, Clements didn't even have to hire an investment bank and go on a road show. Instead, he tapped investors like GE's pension fund and Highfields Capital Management, a Boston hedge fund, for startup money. "We never left our office," he says. "Well, we did once. We went across town from Greenwich to Stamford for a couple of hours."

It will take at least three years for Integro to turn a profit, according to Clements, but he hopes the company will become an industry leader right away by steering clear of the conflicts of interest that led to the regulatory woes of his competitors. Integro will fully disclose any income it receives to its clients. (Marsh, AON, and Willis have made similar vows in the wake of the Spitzer investigation.) And Clements vows it won't become a holding company like Marsh, which owns a mutual fund company, an investigative firm, and a consultancy, and pursued what some former employees say was a disastrous cross-selling strategy under its former CEO Jeffrey Greenberg, who was forced to resign by Spitzer.

Of course, it's hard to escape the fact that Integro's enlightened approach will be led by three veterans of Marsh, the worst offender in the brokerage scandal. Integro co-founder Roger Egan was president of Marsh Inc., the company's brokerage division, last October when Spitzer accused the company of engaging in "anticompetitive practices," while the other co-founder, Peter Garvey, was chief of the division's North American operations. Egan and Garvey say that the bid-rigging occurred without their knowledge. Even so, Marsh asked Egan to step down in November, though he received a full salary until May, when he joined Integro. (Garvey, who was appointed co-president under Marsh's new regime, says Egan was eventually offered his job back, but he refused to take it. Marsh declined to comment.) Whatever happens with Clements & Co., one thing's is certain: This is an industry that could definitely use some healthy competition. -- Devin Leonard