Eliot Sptizer’s shock lawsuit against Marsh Inc exposed more than big-rigging and kickbacks and could be the start of other industry-attacks on dishonest practices.

IKE the universe itself, corporate chicanery just seems to keep on expanding. Unlike earlier versions, however, the latest scandals tend to implicate not just individual companies but entire industries.

In last week’s revelations, courtesy of a civil suit filed last week by Eliot Spitzer, the New York attorney general, the insurance industry got its turn. Stocks of major players in the industry have been hammered and investors are rightly wondering where the next bombshell might fall.

Mr. Spitzer’s suit, which detonated Thursday, was filed against Marsh Inc., whose parent, Marsh & McLennan, also owns Putnam Investments and Mercer Inc., the consulting unit. The suit was a shocker even to industry veterans because it disclosed Mr. Spitzer’s findings of phony bids designed to direct business to certain insurers and to keep insurance rates high. The suit said A.I.G., Ace Ltd. and the Hartford, a unit of Hartford Financial Services, took part in the schemes with Marsh.

Shares in Marsh, the largest insurance broker in the world, have lost 37 percent of their value since Mr. Spitzer filed his suit, wiping out almost $9 billion in investor wealth. Interesting isn’t it, how investors shrugged off Mr. Spitzer’s investigation into improper insurance practices at Marsh and other companies when it came to light on April 23? Back then, Marsh’s shares were at $45.01; they stood at $46.13 before the suit was filed last week.

Besides bid-rigging, Mr. Spitzer’s suit detailed the kickbacks from insurers that brokers receive for sending them business as well as the hidden fees charged to the companies buying insurance. These arrangements, known as marketing service agreements or placement service agreements, were openly used by the industry. But Mr. Spitzer argued that because they were used to steer business, they represented a breach of duty to Marsh’s customers.

Marsh generated $800 million in revenue from the service agreements in 2003, according to Mr. Spitzer’s suit, and most if not all of that probably dropped down to the company’s bottom line, industry experts said. If that is so, the fees accounted for more than half of Marsh’s net income of $1.5 billion last year.

On Friday, Marsh said it would no longer seek these fees. “We are greatly disturbed by the allegations of wrongdoing,” said Jeffrey W. Greenberg, chief executive of Marsh, in a statement. “We take them very seriously, and we are conducting a thorough investigation of these allegations. As the facts are being reviewed, we believe it is in the best interest of our clients to suspend M.S.A.’s immediately,” he added, referring to the market service agreements.

A.I.G. also said it would no longer pay service agreement fees. It said that the company’s senior managers were not aware of the bid-rigging detailed in Mr. Spitzer’s suit.

But even as Marsh and A.I.G. responded to the suit by changing their practices, industry participants and analysts said that Mr. Spitzer’s accusations and his continuing investigation would have many other repercussions for the business. In other words, the trouble for investors in insurance stocks has only just begun. Other companies will soon come under the microscope.

Marsh dominates the global insurance brokerage market, with a 40 percent share. Almost $7 billion, or roughly 60 percent of the company’s $11.5 billion in revenues last year, was generated by brokering insurance to corporate clients. Any significant change to the way the business is done will have a big impact on Marsh. That is why Mr. Market has punished its stock the most.

“The upshot of the news and the investigation is that there will be a fundamental change to the economics of the insurance brokerage business,” said Adam Klauber, director of research at Cochran, Caronia Securities L.L.C., a research firm in Chicago specializing in insurance. “You’re talking about a pretty significant potential economic hit to Marsh. Its earnings will be impacted and its growth going forward will be impacted.”

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