News in Brief: A National Roundup
Insurance Broker Will Pay to Settle Fraud Charges
Marsh & McLennan Cos. Inc., the nation’s largest insurance broker, has agreed to pay $850 million in restitution to its clients—including school customers—who were deceived about the validity of some bids and the broker’s fee arrangements with some insurance companies.
The Jan. 30 agreement settles a complaint filed by New York state Attorney General Eliot L. Spitzer last fall. It alleged that the New York City-based Marsh steered clients toward insurers with which it had undisclosed deals to receive commissions based on the profitability of the accounts, and that the company had solicited rigged bids for some insurance contracts.
One of the specific charges was that Marsh had procured tainted and false bids for insurance for a $910 million school building program in the 62,000-student Greenville, S.C., school district. ("N.Y. Insurance Suit Catches Attention Of School Districts," Nov. 3, 2004.)
Without admitting any guilt, the company also agreed to adopt a business model to avoid conflicts of interest. It has apologized and admitted that “certain Marsh employees unlawfully deceived their customers,” practices it called “shameful.”
Marsh has until April 30 to identify its U.S. customers from 2001 to 2004 who may be entitled to restitution from the $850 million fund.
Vol. 24, Issue 22, Page 4