New York Attorney General Eliot Spitzer said today that the monies from the $850 million settlement his office negotiated with Marsh would be used to refund insureds who wish to take advantage of the funds.
“Not a penny goes to the state or the lawyers. It all goes back to insureds,” Spitzer said in remarks before the National Press Club in Washington, D.C. He noted that there could be additional suits from insureds who choose not to participate in the settlement he has made with Marsh.
The Empire State official who brought charges against Marsh for bid rigging and improper use of contingent commissions said the settlement amount equals about one year of Marsh’s income from contingent commissions. “That’s where we got the figure,” he said.
In response to a question whether the abuses he uncovered in the insurance industry involved a “few bad apples,” he quipped that at a minimum he has uncovered a “few bad bushels.” He added, however, that he did “not want to paint the entire industry with a broad brush,” acknowledging that there are “many spectacular” people in the insurance industry.
The agreement with Marsh includes a prohibition that Marsh not accept contingent commissions but Spitzer said he was not prepared to say that such fees should be banned industry-wide. The problem at Marsh was that such fees were being used in ways that “fundamentally” distorted the marketplace, abused fiduciary duties and inflated premiums. “There may be other contexts where contingent agreements might not usurp decision-making and fiduciary duty,” he added.
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