Following investigations into fraud and anti-competition practices by New York Attorney General Eliot Spitzer at the country’s third-largest insurance broker, Willis has agreed to pay $51 million in fines and adopt reforms, according to Reuters. Minnesota Attorney General Mike Hatch has been assured $1 million for affected residents of his state, while Spitzer will receive $50 million.
The Minnesota action is the result to of a suit filed by the Attorney General on March 8.
The reforms that will be put in place are meant to remove all conflict of interest within the company and will provide for greater disclosure to clients and greater transparency in future insurance transactions, according to a press release from Willis.
In a strongly-worded statement, Willis Chairman and CEO Joe Plumeri asserted that his company was the first major broker in the country to end the use of contingent commissions. He also disavowed the use of such devices, saying that “[w]e believe that all insurance brokers and insurers should relinquish the use of contingent agreements.”
The use of contingent commissions at insurance
brokers has been widely investigated by Spitzer, resulting
in massive fines and multiple executive resignations at
companies across the country (See
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Prompts Three More Guilty Pleas