Sixth Insurance Exec Pleads In Spitzer Probe

By Daniel Hays

NU Online News Service, Jan. 6, 2 :35 p.m. EST?Robert Stearns, a former vice president with Marsh Inc. brokerage, has pled guilty to felony charges in connection with an insurance bid-rigging scheme at the company, it was announced today.[@@]

He is the first Marsh executive to be charged in the brokerage investigation by New York Attorney General Eliot Spitzer's office.

Previously, executives with three insurers--American International Group, Zurich American Insurance Company and ACE--have pled to being part of the bid-rigging operation.

According to the attorney general's office, Mr. Stearns admitted to Judge James Yates in Manhattan Supreme Court that from 2002 to 2004 he instructed insurers to submit noncompetitive bids for business and conveyed those phony bids to Marsh clients.

The operation allowed Marsh to control the market, to protect carriers when their business was up for renewal and to maximize Marsh profits, Mr. Spitzer's office said.

Mr. Stearn's guilty plea to scheme-to-defraud in the first degree carries a maximum sentence of one-and-one-third to four years in state prison. The announcement said he would be expected to testify in future cases, as have five other executives who have entered guilty pleas.

A criminal complaint filed against Mr. Stearns by Sylvia Rivera, an investigator with the attorney general's criminal investigations unit, said the charge was based on records provided by Marsh attorneys.

Ms. Rivera stated the evidence against Mr. Stearns included e-mails from him and "his accomplices" as well as an interview he gave to another investigator.

From 2002 to 2004, while Mr. Stearns worked in the Marsh excess casualty unit in New York, he and others at his company instructed insurance company personnel to submit specific quotes for insurance coverage, according to Mr. Rivera.

The complaint states that Mr. Stearns and others at Marsh knew the quotes were less favorable than those of the carriers who were already supplying the coverage.

According to Ms. Rivera, the group referred to the phony offerings as backup quotes, protective quotes, B quotes or "Bs."

According to a March 19, 2003 e-mail exchange cited in the compliant, Mr. Stearns wrote a colleague, William McBurnie, that "Chubb have quoted lead renewal at?$135,000. Would you please have AIG provide a B."

Later, he wrote that "A ?B' would be a quote from AIG which is higher in premium and more restrictive in coverage thus supporting the Chubb quote."

Mr. Stearns was also said to have sent an e-mail to Marsh broker April Greenwood asking her, "Can you get me a B from Zurich. Client will be binding with St. Paul at $270,000 all coverages as expiring. $325,000 should work."

According to the complaint, he followed that e-mail to Ms Greenwood with another to "have them issue a B on the lead at $325,000 or more." The following day, Mr. Rivera stated, a Zurich underwriter provided a $360,000 quote to Marsh.

The complaint cites a March 5, 2003 e-mail from Josh Bewlay, the head of Marsh's Global Broking Unit, telling Mr. Stearns to get a quote from an unidentified "Pete" so that AIG could get a 25 percent increase. Zurich, ACE and St. Paul had followed with losing quotes, the complaint stated.

One e-mail cited from Marsh broker Greg Doherty to ACE underwriter James Williams, instructed: "need a ?B' for [obscenities] and giggles."

Barbara Perlmutter, a representative for Marsh parent company Marsh & McLennan Companies in New York, said Mr. Stearns no longer worked for the company, but she could provide no other details about his tenure.

Later the company put out a statement saying it was "saddened" and "will continue to cooperate fully with the office of the attorney general in its investigation. We are committed to resolving the company's legal issues and to serving our clients with the highest standards of transparency and ethics."

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