According to New York State Attorney General Eliot Spitzer, Aon, the second-largest insurance broker in the country, has agreed to settle and adopt reforms to end an investigation by the Spitzer and the Attorneys General from Connecticut and Illinois. The reforms include ending contingency fees. The fine will be paid over a three-year period, according to a press release from Spitzer.
“The underlying complaint in this case shows that improper conduct was pervasive at Aon,” Spitzer said in the announcement. “To its credit, however, the company has acknowledged the problems, has agreed to compensate policyholders and has adopted reforms that will provide greater accountability in the future.”
Aon CEO Patrick Ryan agreed. According to the Associated Press, Ryan said that Aon and other brokers and consultants had used the contingent commissions, a set-up that regulators claimed created a conflict of interest. Early this year, Aon officials had said that they expected to pay out more than $50 million to settle the investigations; however, at the time, the company did not admit any wrongdoing, according to the AP.
The agreement with Aon was modeled after an earlier accord reached January 31 with the nation’s largest insurance broker, Marsh & McLennan Companies, according to Spitzer. Marsh agreed to pay $850 million to settle the charges against it (See MMC Settles ‘Shameful’ Bid-Rigging Case ).
Spitzer and other regulators have been investigating the insurance industry and have had 10 executives plead guilty to charges of bid rigging (See Spitzer Insurance Bid-Rigging Probe Prompts Three More Guilty Pleas ).
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