CHARLESTON, W.Va. - West Virginia's Darrell McGraw and eight other state attorneys general settled with insurance broker Marsh & McLennan on Monday, resolving four-year-old allegations of bid-rigging for a collective $7 million.
The amount is far below the $850 million the company agreed to pay in 2005 as restitution to consumers. That settlement was steered by former New York Attorney General Eliot Spitzer, who later became governor before a sex scandal involving a prostitution ring forced him to resign.
"Marsh's conduct underscores the need for strong enforcement and deterrence in the insurance arena," said Massachusetts Attorney General Martha Coakley, whose state is receiving $1 million of the settlement.
"Customers need to know they can trust their brokers and that their insurance brokers are working with the customer's interests at heart."
The attorneys general claim Marsh & McLennan took part in a bid-rigging scheme that steered business toward certain insurance companies and inflated what consumers thought were competitive premiums by comparing them against other intentionally uncompetitive bids.
Zurich American Insurance Co. is alleged to be one of the companies that benefited from Marsh's alleged scheme. Zurich paid $92 million to 16 state attorneys general and agreed to pay $210 for restitution in Jan. 2007.
American International Group, ACE Group Holdings, Travelers Insurance Companies have also been accused of participating in the alleged scheme. Coakley's office has obtained consent judgments against ACE and Travelers and a $1.3 million settlement with AIG.
Other attorneys general who joined Coakley and McGraw in Monday's settlement are Florida's Bill McCollum, Hawaii's Mark Bennett, Maryland's Doug Gansler, Oregon's Hardy Myers, Texas's Greg Abbott and Pennsylvania's Tom Corbett.