Marsh & McLennan, America’s largest insurance brokerage company, agreed today to pay $850 million to settle charges by the New York State attorney general that it took payoffs from insurance companies to send them clients.
Under the agreement, Marsh & McLennan will set up an $850 million fund to provide restitution to nationwide policyholders over four years. It said none of the money represented a fine or a penalty.
Marsh said it neither admitted nor denied allegations in a complaint filed last October by Attorney General Eliot Spitzer of New York.
But in a statement on the attorney general’s Web site, Marsh issued a public apology for what it called “unlawful” and “shameful” conduct.
“To its credit, Marsh is not disputing the problems identified in our original complaint,” Mr. Spitzer said. “Instead, the company has embraced restitution and reform as a way of making a clean break from the practices that misled and harmed its clients in the past.”
The fund will compensate clients who retained Marsh to obtain insurance between Jan. 1, 2001, and last Dec. 31, the company said in a statement. Companies will not have to prove they were harmed in order to receive payment.
Marsh was accused of cheating customers by creating a false appearance of competition and steering clients to the highest-paying insurers.
The company will work with the attorney general’s office and the New York State insurance department to encourage clients to take part in the fund.
In addition, Mr. Spitzer said, Marsh will adopt “dramatic new reforms,” including an agreement to limit its insurance brokerage compensation to a single fee or commission at the time of placement.
It will also ban so-called contingent commissions and a requirement that all forms of compensation will be disclosed to and approved by Marsh’s clients.