The pact, negotiated through the National Association of Insurance Commissioners (NAIC), calls for the company to extend the reforms it agreed to in January with New York state Attorney General Eliot Spitzer to settle Spitzer’s allegations of fraud and bid-rigging allegations (See MMC Settles ‘Shameful’ Bid-Rigging Case ). Spitzer’s October 2004 lawsuit accused Marsh & McLennan of soliciting fake quotes and steering clients to insurers that paid the most fees.
“This agreement represents an important step forward for Marsh and a reaffirmation of Marsh’s commitment to business reform,” asserted Michael Cherkasky, president and chief executive officer of Marsh & McLennan in a separate statement .
In the Spitzer agreement, Marsh’s adopted policies included limiting its brokerage compensation to a single fee or commission at the time of placement, banning contingent commissions, and requiring disclosure of all forms of compensation to the clients. Marsh & McLennan also agreed to pay its clients $850 million in the Empire State pact. Under the newest deal, the participating regulators will receive ongoing compliance reports from Marsh, have the authority to enforce reforms, and retain the ability to continue ongoing investigations with Marsh’s cooperation, according to NAIC.
“The settlement agreement is designed to see that the extensive compensation and disclosure reforms are implemented by Marsh,” NAIC said in a Web announcement .
“I am pleased that the Marsh settlement’s reforms will be enforced nationwide because of our agreement,” Mike Kreidler, Washington Insurance Commissioner and chair of the NAIC subgroup that negotiated the agreement with Marsh, said in the Web statement. “Insurance consumers benefit from fairer treatment and greater disclosure. It clearly helps move the entire commercial brokerage industry to a higher ethical standard.”