Aon Will Appeal Broker Commission Case Ruling
By Daniel Hays
NU Online News Service, July 30, 1:24 p.m. EDT?Aon Corp. said it will appeal a decision by a Chicago judge to give class-action status to a lawsuit alleging contingent commissions that insurers paid the brokerage amounted to hidden "kickbacks."[@@]
Rick Stone, an attorney for plaintiffs in the case said the fee monies involved were huge–totaling $200 million a year–and encompassed more than a decade of activity.
The fees are currently under scrutiny by New York Attorney General Eliot Spitzer, who earlier this year subpoenaed Aon and other large brokers for information concerning the practice.
An Aon spokesman said that the company has been "in regular communication" with Mr. Spitzer's office, but he could not reveal the subject of the discussions. "We are complying with all of their requests and things are moving forward," said Al Orendorff.
He passed on a company statement that called the Chicago case class certification purely procedural and said it "says nothing about the merits of the case. Aon strongly disagrees with the decision and will seek to have it overturned on appeal. We believe that plaintiffs' claims are completely without merit."
Brokers, in response to the subpoenas, have said that their acceptance of the fees is a longstanding practice, involves no conflict of interest, and is disclosed to customers.
Mr. Stone said that some brokers very recently have started to change the notice they give. He said Aon "possibly made some changes, but not in any material way." He said the suit seeks to either have the brokerage stop taking the fees or "get actual consent" from customers before they accept them.
The suit was filed on behalf of Alan S. Daniels, an independent New Jersey insurance agent, and Williamson County Agricultural Association, an Illinois not-for-profit that sponsors county fairs.
Cook County Circuit Judge Julia M. Nowicki, in her opinion finding for the plaintiffs, noted that "there is great potential for the everyday practices of Aon to have a direct or indirect effect on a vast number of individuals and entities. As such, this lawsuit presents an issue of public concern."
The plaintiffs in the case allege Aon designed a scheme requiring its subsidiaries and brokers were required not to disclose commissions and that the scheme was run out of Aon's Illinois headquarters in Chicago.
Judge Nowicki said in her opinion it was to Aon's benefit to have the issues in the case decided as a class action in Chicago "in a single forum and at a single time, rather than in the forums of 50 states or by way of the filing of thousands and thousands of individual cases?"
Suits making similar allegations against other brokerages have been filed in California as well as Illinois.
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