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Insurance brokerage giant Marsh & McLennan is fighting desperately in upstate New York and elsewhere to restore its damaged reputation and retain its customer base, even as it revamps its business model and lays off staff in a bid to cut costs.

The nation's largest insurance brokerage is at the center of an investigation led by New York Attorney General Eliot Spitzer, who accuses Marsh of rigging bids, fixing prices, and taking kickbacks from insurers in exchange for steering business to them. The charges, contained in a civil lawsuit filed by Spitzer last month, led to the resignation of former Marsh & McLennan CEO Jeffrey Greenberg and to the dismissal of three other executives this week.

Clients are asking questions and demanding answers.

"We certainly have a lot of concerns," said Larry T. DeAngelo, senior vice president of administration at medical battery maker Wilson Greatbatch in Clarence, a Marsh customer since early 1998. "At this point, we are satisfied, but we certainly expect to be treated equitably in the process in any interactions with them. They know where we stand in that area."

The crisis is already having a financial impact on the company, whose stock is down 42 percent since Spitzer filed suit.

On Tuesday, the New York-based company said it would cut 3,000 jobs -- about 5 percent of its work force -- after third-quarter profit plunged 94 percent because the company set aside $232 million for a possible settlement with Spitzer and collected fewer fees from insurers. The cuts will cost about $325 million over the next six months, but will then save $350 million a year.

About three-quarters of the job cuts, or 2,250 positions, will be in the company's Marsh Inc. brokerage division, which employs 21 brokers at its Buffalo office and about 100 at four offices across upstate New York. A local official said the Buffalo office did not yet know how it might be affected.

In the meantime, the company is taking a series of steps to change how it does business and ensure that clients understand exactly how it makes its money. In particular, after the end of the quarter, it stopped accepting the commissions from insurance companies that Spitzer has decried as kickbacks, although it still plans to collect those owed to it from before Oct. 1. Other changes will be effective by Jan. 1.

Officials will reimburse customers who were harmed, although they say that's very few clients.

"We have taken a critical step to protect and expand our market leadership position," said new Marsh CEO Michael G. Cherkasky, speaking on a conference call to reporters late last month. "At the bottom line, this is all about our clients: what they want, what they need, and what Marsh can uniquely provide."

The firm is also responding pro-actively in some cases to individual client questions and concerns to protect its 40 percent national market share. Officials want to reassure their customers that Marsh has their best interests at heart, and is representing them in the best way.

Marsh, which also owns consulting firm Mercer and mutual fund company Putnam Investments, represents some of the nation's largest insurance buyers in obtaining a range of commercial and other coverage.

"We believe the Marsh model is a superior model for our clients," Cherkasky said on the call. "We believe we can do better for our clients."

Locally, Marsh's offices in Buffalo and three other upstate cities are trying to keep their customers focused on the personal relationships and trust they've developed with brokers here, clients say. And they've sought to assuage concerns that any illegal or questionable activities could have influenced contracts for upstate clients.

Marsh's local officials said they could not comment, citing corporate policy because of the pending litigation.

For now, the firm's efforts seem to be stemming any parade of clients out Marsh's doors. But customers say they're watching closely for new developments.

"Marsh has been very communicative regarding this issue and continues to update us as new information becomes available," said David Mihalyov, spokesman for Paetec Corp., a Rochester-based business-to-business telecommunications firm. "We are considering all of our options and will make an informed decision at the appropriate time."

In the meantime, rival brokers and agents locally don't expect to get much business from Marsh's woes. For one thing, the small agencies can't compete with Marsh for the largest clients, said Richard A. Poppa, president and CEO of the Independent Insurance Agents and Brokers of New York.

And others don't want to beat up on their rivals over something that's affecting the entire industry. "We wouldn't bring in new business on the heels of this," said John G. Berger Jr., chief operating officer of Niagara Insurance Group in Williamsville, part of Brown & Brown, the nation's No. 8 insurance agency.

The insurance industry has been hammered since Spitzer announced his lawsuit against Marsh and arrested three executives from insurers American International Group and Ace Ltd. He accused Marsh of directing business to the insurers that paid the most in so-called "contingent commissions" even though it purported to represent its clients.

Since then, Marsh and the No. 2 and 3 insurance brokerages -- Chicago-based Aon Corp. and Willis Group Holdings Ltd. of New York -- have all stopped taking the controversial fees and some insurers say they will no longer pay them.

In its bid to quickly repair its image, Marsh plans to give each of its clients details in writing about all fees, commissions and other compensation it receives.

The company is also centralizing its insurance placement group so it can coordinate its work for clients and create an audit trail to show what it is doing. All telephone calls will be recorded and e-mails monitored centrally to ensure the firm does the best job for clients.

Marsh will also make its negotiations with insurers "transparent," require them to show commission rates on all policies, and seek consistent rates for rival quotes on the same contract.

So far, client turnover has been mostly normal, but officials have seen a big surge in clients asking questions.

"They deserve to have answers, and we're providing those," Cherkasky said last month. "It's a wait-and-see attitude from most of our clients. These are long-term relationships and they understand the value they've gotten from Marsh."

Such clients include Wilson Greatbatch, who contacted Marsh when the allegations surfaced. The company didn't ask about getting money back, but "we tried to get a comfort level that the problems that they were having didn't involve us in any way, shape or form," DeAngelo said.

"Needless to say, we have developed good working relationships with the people at the local level, and that's the face of Marsh that we tend to see. It's all about the relationships out of the local office as far as we're concerned at this point in time."

The Associated Press contributed to this report.