Marsh & McLennan Companies has agreed to pay Ohio $4.75 million to settle an antitrust lawsuit stemming from allegations that the company's insurance brokerage firm engaged in a bid-rigging and kickback scheme in return for lucrative contingent commissions.

Last week, Ohio Attorney General Richard Cordray said MMC settled a lawsuit filed in Cuyahoga County Common Pleas Court that accused MMC's brokerage subsidiary Marsh of "conspiring with various insurers to eliminate competition in the commercial casualty insurance industry."

The suit accused Marsh of conspiring to provide customers with fictitious quotes that created a false impression that competitive bidding had produced the best possible price during the years 2001-2004.

A total of 26 public entities–including universities, schools, municipalities, retirement systems and public authorities–will receive portions of the recent Ohio settlement.

"We are pleased to have resolved this matter, which relates to events dating back to 2004 and earlier," MMC said in a statement. "The settlement makes no findings against Marsh, includes no fines or penalties, and expressly does not include any admission of liability by the company."

"This settlement regains a piece of what we lost as a result of secret conspiracies that ultimately cost Ohioans millions in premium payments by schools, universities, cities, counties and others," said Mr. Cordray in a statement.

The attorney general's office said it has recovered more than $27 million as a result of the lawsuit against Marsh and various insurers. Earlier this year, Mr. Cordray settled with American International Group and Hartford Financial Services Group for more than $9 million.

Cases are still pending against ACE American Insurance Company and Chubb Corp. related to the Marsh allegations, the attorney general said.

The accusations stem from the investigation by former New York Attorney General Eliot Spitzer that alleged Marsh engaged in a bid-rigging and kickback scheme over the placement of insurance with carriers paying lucrative, volume-based contingent commissions.

MMC paid $850 million into a settlement fund in 2005 to end the New York investigations. As part of the agreement, MMC gave up taking contingent commissions, which was a substantial part of its revenues at the time, resulting in tremendous disruption to the company.

At the beginning of this year, Marsh, along with Aon, reached an agreement with the New York, Connecticut and Illinois attorneys general that would allow them to once again accept contingents, but under new disclosure rules being mandated by the New York Insurance Department for all producers, starting on Jan. 1.

A representative for Marsh said there are no more attorney general cases pending regarding this matter, but a handful of private policyholder lawsuits remain.

Special Reports /

MMC To Pay Ohio $4.75M To Settle Bid-Rigging Suit

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