ERC In-House Probe Finds Bid-Rigging Instances

December 2, 2004 ( - Employers Reinsurance Corp. (ERC) has discovered a handful of instances in which two of its workers conspired with Marsh Inc. employees to rig worker's compensation insurance bids.

According to a Crain Communications report, the information came out of an ERC internal investigation that focused on about 10 cases over the last four years. In those instances, underwriters at ERC, a unit of GE Insurance Solutions, put in excess workers comp quotes to Marsh and were asked by Marsh executives to resubmit higher quotes, an ERC spokesman told Crain.

The ERC underwriters provided the higher quotes knowing that Marsh would not award it the business, the spokesman told Crain. One of the employees involved in the incidents left ERC three years ago, while another has been suspended since the investigation started, the spokesman said. Premiums quoted in all 10 incidents combined amounted to less than $1 million, he said.

ERC has given the results of its investigation to New York State Attorney General Eliot Spitzer and to the Missouri Insurance Department, according to the spokesman, who said the internal investigation is continuing.

Spitzer filed suit against Marsh earlier this year, charging the broker with steering clients to insurers paying it the highest contingent commissions and soliciting inflated quotes to rig placements in favor of insurers it selected (See  Spitzer Takes On Contingent Commissions  ).