The nation's largest insurance brokerage will pay $850 million in restitution to end New York Attorney General Eliot Spitzer's investigation...
ALBANY, N.Y. — The nation’s largest insurance brokerage will pay $850 million in restitution to end New York Attorney General Eliot Spitzer’s investigation into bid rigging and price fixing in a settlement the company hopes will end other states’ probes and private lawsuits.
Marsh & McLennan will provide restitution over four years to clients, most of which were corporations. The payout will include $130 million to customers in California, $94 million to New York clients, $58 million in Pennsylvania and $55 million in Texas.
Companies that accepted the payment would agree not to sue Marsh.
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“It is one of the largest restitution funds in history that we are aware of from a single company,” Spitzer said. “We are establishing new ethical ground rules for this industry.”
Marsh & McLennan, based in New York, also issued an apology calling its conduct “unlawful” and “shameful,” Spitzer said. And the company will publicly promise to adopt reforms, he added.
“We are ashamed at what a few, of amongst the tens of thousands of Marsh employees, have done to our clients, their fellow employees, the shareholders and our company,” said Michael Cherkasky, Marsh president and chief executive officer.
“The cost is significant, but if it can help the healing process, assist us in restoring trust with our clients — and we believe it will — then it is an investment that, in the end, will be well worth it and make us a much better company.”
Marsh shares rose $1.41, or 4.5 percent, to close at $32.50 in trading on the New York Stock Exchange yesterday.
Spitzer sued Marsh in October. That suit also implicated American International Group (AIG) and several other major insurance companies. Spitzer said brokers took payoffs from insurance companies to steer corporate clients their way rather than get the best prices for policies, as they are required to do.
AIG declined comment.