The National Association of Insurance Commissioners says it has reached a multistate settlement agreement with Marsh & McLennan Companies Inc.[@@]
The NAIC settlement endorses a settlement negotiated by New York Attorney General Eliot Spitzer and New York Insurance Superintendent Howard Mills in January.
Executives at Marsh & McLennan’s brokerage firm, Marsh, were accused of taking kickbacks and of steering insurance contracts to carriers in return for lucrative, volume-based contingent commissions.
The January settlement will require Marsh & McLennan, New York, to put $850 million in a client restitution fund.
Marsh & McLennan also agreed to a ban on contingent commissions and full disclosure of compensation arrangements.
The NAIC says Marsh clients had until Tuesday to opt into the agreement, but the group postponed making the announcement until Wednesday, so as not to appear to interfere with clients’ decisions.
“I am pleased that the Marsh settlement’s reforms will be enforced nationwide because of our agreement,” says Mike Kreidler, Washington insurance commissioner and chairman of the NAIC arm that negotiated the agreement with Marsh.
The settlement “clearly helps move the entire commercial brokerage industry to a higher ethical standard,” Kreidler says.
Michael Cherkasky, president of Marsh & McLennan, has issued a statement welcoming the NAIC settlement. The agreement “represents an important step forward for Marsh and a reaffirmation of Marsh’s commitment to business reform,” Cherkasky says in the statement.