Aon Negotiates On Three Fronts To End Probes
By Mark E. Ruquet
NU Online News Service, Feb. 22, 4:24 p.m. EST?Aon Corporation is negotiating with three state attorneys general to stave off any government actions being taken against it over alleged questionable reinsurance arrangements, according to press reports.[@@]
The Chicago-based insurance broker is working with New York, Connecticut and Illinois to work out a deal that would keep it from being targeted by a civil suit as was the case with Marsh & McLennan Companies.
In October of last year, New York Attorney General Eliot Spitzer sued New York-based MMC, accusing its brokerage firm, Marsh, of bid-rigging and steering insurance contracts to insurers who paid profitable contingent fee commissions based on volume placements. The broker was accused soliciting false bids and other abuses.
While no one has officially accused Aon of any wrongdoing, some speculation centers on the firm’s tying the placement of insurance contracts with its reinsurance brokerage business. Under this scenario, an insurer would not receive a submission unless the carrier agreed to place its reinsurance business through an Aon broker
A spokesman from Aon declined to comment on the reports.
Brad Maione, a spokesman for Mr. Spitzer’s office, would say only that negotiations are ongoing, and declined to comment further.
Susan Hofer, a spokeswoman for the Illinois Department of Financial and Professional Regulation, which is responsible for insurance regulation, said the department is aware of ongoing negotiations but did not know the status.
When asked if the department would have to be involved in negotiations with a carrier or broker under statute or regulation, she said if an agreement involves any remuneration to consumers or other activity with consumers, the department would have to become involved at some point.
She noted that the Illinois department has been conducting its own investigation since November when it subpoenaed carriers and brokers based in the state to answer questions about payment and compensation.
The Illinois investigation is continuing, Ms. Hofer said, and the department hopes to wrap up the inquiries soon so it can present any necessary legislation before the end of the spring legislative session.
“That is not to say that there will be a request for new legislation,” she noted. “It would be premature to say what would be asked for before the end of the investigation.”
A spokesman for the State of New York Insurance Department declined to comment.
Earlier this month Aon announced it would set-up a $50 million fund toward any legal settlements stemming from the multistate probe. MMC set $230 million aside for the same purpose, only to make a final settlement of $850 million with New York’s attorney general.