Aon $38 Million Fee Case Settlement

Aon $38 Million Fee Case Settlement

By Mark E. Ruquet

NU Online News Service, March 11, 9:16 a.m. EST?Aon insurance brokerage has reached a preliminary $38 million agreement to settle charges in a class action by Aon clients, which alleged that the firm's contingent commissions from insurers were hidden kickbacks, a spokesman for the company confirmed last night.[@@]

Spokesman Al Orendorf said he could not comment further concerning the class action settlement which was given preliminary approval in Chicago's Cook County Circuit Court by Judge Julia M. Nowicki. Aon's headquarters is in Chicago.

In July of last year, when Judge Nowicki certified the case as a class action, Aon said it believed the "plaintiffs claims are completely without merit." Last week Aon's Chief Executive Officer Patrick Ryan issued a public apology for the firm's contingency fee practices.

The suit was orginally brought on behalf of Alan S. Daniels, an independent New Jersey insurance agent, who obtained liability insurance and Williamson County Agricultural Association, an Illinois not-for-profit that sponsors county fairs.

The plaintiffs in the case charged that Aon designed a scheme requiring its subsidiaries and brokers not to disclose commissions. Ron Stone, an attorney for plaintiffs in the case said previously that the fee monies involved in the suit totalled $200 million a year and encompassed more than a decade of activity.

On Wednesday Moody's Investors Service upgraded its rating for Aon raising its outlook from "negative" to "stable." The rating agency also reaffirmed the company's senior debt rating of "Baa2."

Moody's said it changed the rating after Aon reached a March 4 $190 million settlement with three state attorneys general and two insurance regulators in New York, Connecticut and Illinois to compensate clients in the wake of its alleged contingency fee abuses. The agreement was announced last Friday.

The agency went on to say that it felt Aon will be able to handle the restitution amount despite challenges from an insurance market with softening prices.