The National Association of Insurance Commissioners said it has reached a multistate settlement agreement with Marsh & McLennan Companies Inc. endorsing the settlement worked out by New York's attorney general and insurance superintendent.
The NAIC said the agreement endorses the plan reached with New York Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills in January, requiring MMC to pay $850 million into a restitution fund to be dispersed to clients.
Executives in MMC's brokerage firm, Marsh, were accused of taking kick-backs and steering insurance contracts to carriers in return for lucrative volume-based contingent commissions.
MMC also agreed to other corporate reforms, including the banning of contingent commissions and full disclosure of compensation to clients.
"I am pleased that the Marsh settlement's reforms will be enforced nationwide because of our agreement," said Mike Kreidler, Washington Insurance Commissioner and chairman of the NAIC subgroup that negotiated the agreement with Marsh. "I commend the state insurance regulators who made this agreement to protect the insurance-buying public."
He added that the settlement "clearly helps move the entire commercial brokerage industry to a higher ethical standard."
Diane Koken, NAIC president and Pennsylvania Insurance Commissioner, noted that the regulatory controls "embodied in this global agreement are prudent and comprehensive."
NAIC said Marsh clients had until Tuesday to opt into the agreement, but it held off making the announcement until Wednesday, so as not to appear to interfere with clients' decisions.
In a statement, Michael G. Cherkasky, president and chief executive officer of MMC, said: "We are pleased to have reached this agreement and express our appreciation to Commissioner Kreidler, NAIC President Koken, and the other commissioners and members of the special NAIC Task Force, who have worked diligently to reach this resolution."
He added that the agreement "represents an important step forward for Marsh and a reaffirmation of Marsh's commitment to business reform."
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