Marsh & McLennan, the broker at the centre of America’s insurance scandal, is setting up a $230m compensation fund as it tries to rescue its tarnished image.
The world’s biggest insurance broker has moved quickly since facing accusations that it is part of a cartel that fixes prices and squeezes out competition – allegations that have left Wall Street fighting sleaze once again.
Michael Cherkasky, hired last week as chief executive after Jeffrey Greenberg was ousted, hopes the restitution fund will convince watchdogs the company is committed to changing its culture.
It is understood that he phoned Eliot Spitzer, the New York attorney general leading the investigation, to report the existence of the fund.
Mr Spitzer’s office seemed to welcome the move but noted that the inquiry was far from over.
“There is still a lot of investigating and actions to do before there is any resolution. We’re not at the point where any settlement agreement is under way,” said a spokesman.
Last week it emerged that Marsh may have to pay $500m in fines alone to settle the charges, which include the suggestion that it took improper commissions from insurers and engaged in bid rigging.
Mr Spitzer later disputed this figure, hinting that it could be far higher.
Marsh said the money for the fund would come from the “contingent commissions” that are the basis of the allegations. It has agreed to stop taking such fees, which are dependent on the amount of business it places with insurers.
Marsh was paid $845m in contingent commissions last year, suggesting it now faces a massive drop in revenues.