|  | | 2005 News and Press Releases | | |
SETTLEMENT NEWS:
Marsh Pays $850m For Ripping Off Customers: Offers Mea Culpa For Bid-Rigging, Kickbacks
Kevin Burke
Annuity Market News. March 1, 2005
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EXCERPT: Marsh & McLennan, the nation's largest insurance broker, last week agreed to an $850 million settlement with New York Attorney General Eliot Spitzer for conspiring to rig insurance bids and steer business to preferred insurers in exchange for lucrative kickbacks. The settlement was the largest brought against an individual firm during Spitzer's tenure as Gotham's chief regulator and looks to be a blueprint for all future cases involving abusive insurance sales practices. Under the terms of the deal, Marsh will not pay a fine or a penalty but, rather, must make annual contributions to a restitution fund over the next four years to be returned to policyholders harmed by the scheme. An initial payment of $255 million is due June 1. Sorry Apology - Marsh apologized for the actions of a handful of its 60,000 employees, calling their conduct both "shameful" and "unlawful." The New York-based company vowed to make the necessary business and governance reforms to regain the trust of its clients. "This settlement culminates a dark period in this company's history," said Chief Executive Officer Michael Cherkasky on a conference call with reporters. Still, Marsh stopped short of admitting any wrongdoing, an obvious attempt to prevent an onslaught of class-action lawsuits and further sanctions from other state regulators. Interestingly enough, the apology was included in the Spitzer agreement but was noticeably absent from Marsh's press release, its Web site and its 8-K filing with the Securities and Exchange Commission. Marsh spokeswoman Barbara Perlmutter explained that the apology was likely omitted for "redundancy" purposes. |
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