Marsh & McLennan Companies Inc. says half of all eligible customers and 90% of its biggest customers have decided to participate in an $850 million settlement fund.[@@]
Marsh, New York, a large insurance brokerage and consulting firm, set up the fund in January to implement a settlement agreement negotiated with New York Attorney General Eliot Spitzer and New York Insurance Superintendent Howard Mills.
Marsh settled with New York after officials there filed suit against Marsh and charged that Marsh had rigged bids and fixed prices in exchange for hidden fees from insurers.
Spitzer had accused Marsh of using questionable, poorly disclosed compensation arrangements.
Preliminary results suggest that almost 70,000 of the 140,000 policyholders who were eligible to share in the settlement payout signed up for the fund, Marsh says.
The participating policyholders will receive about $750 million of the $850 million in settlement fund payments, Marsh says.
Marsh was pleased by the fact that 90% of the largest policyholders opted in, according to Marsh spokesperson Barbara Perlmutter.
The policyholders had until Sept. 20 to sign up for the fund and waive their right to sue Marsh.
Payments will be made in 4 installments, on Nov. 1, 2005, and on June 30 in 2006, 2007 and 2008.
Perlmutter says the $100 million left over in the settlement funds will be used for additional client settlements in accordance with the settlement agreement.
Marsh and the National Association of Insurance Commissioners, Kansas City, Mo., have announced that state commissioners will accept the agreement and end their own actions against Marsh.
But that announcement does not have any bearing on other litigation or the discussions Marsh is having with several attorneys general, Perlmutter says.
Recently, Connecticut Attorney General Richard Blumenthal announced that he is expanding his lawsuit against Marsh to include allegations of bid-rigging, price fixing and illegally steering state business and consumers to favored insurers in return for “tens of millions of dollars in undisclosed kickbacks.”
Blumenthal says the new allegations, which were previously limited to a state contract, could now involve “thousands” of the state’s residents. He says the suit would seek money back for corporate, nonprofit, government and individuals harmed by Marsh’s practices.
“There were about 1,100 Connecticut policyholders who elected to participate in the [Marsh] settlement out of 2,800,” Blumenthal says. “Our lawsuit seeks to help to obtain compensation for the remaining 1,700 or even additional compensation for those who participated. So, this [settlement] litigation in no way makes our litigation moot or academic.”