ERC Probe Uncovers Marsh Bid-Rigging
By Mark E. Ruquet
NU Online News Service, Nov. 24, 1:19 p.m. EST?Employers Reinsurance Corporation said after an "extensive five-week internal investigation" it found two employees involved in submitting questionable quotes for Marsh & McLennan Companies.[@@]
The Kansas City, Mo.-based workers' compensation insurer said it "identified a limited number of isolated issues" concerning the submission of inflated quotes to New York-based MMC, the parent company of Marsh Inc. brokerage, involving premiums of less than $1 million.
Dean Davison, a spokesman for the company, said the submissions involved fewer than 10 quotes over a period of four years. The quotes involved prices for excess workers' compensation coverage.
One employee left the firm three years ago, said Mr. Davison, and the other is currently suspended. He would not identify the employees or say what office they worked out of other than that the two were based in the United States.
He said ERC's internal investigation began a month before the company received a subpoena from New York State Attorney General Eliot Spitzer's office last week. The company has reported its findings to Mr. Spitzer and the Missouri Department of Insurance.
Mr. Spitzer has filed a civil suit against MMC charging the company's Marsh Inc. unit was involved in price-fixing and bid-rigging with insurers. The suit alleges that Marsh took payoffs from insurers disguised as fees and commissions in exchange for steering business to carriers.
The broker is accused of arranging for bogus high quotes to make it appear that it had shopped for customers' coverage.
At ERC, Mr. Davison said, "We take this matter very seriously and the investigation continues," adding that the company has received inquiries from other states and is cooperating fully. "We took the initiative to bring this investigation and find these issues."
ERC last year wrote premiums totaling about $9.7 billion.
MMC is currently in settlement talks with the department. Meanwhile, investigations of other brokers and insurers, by Mr. Spitzer and regulators in 10 other states continue throughout the United States.
ERC is a unit of GE Insurance Solutions.
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