Marsh & McLennan Companies Inc. is looking to collect about $230 million in incentive fees at the heart of a bid-rigging probe by New York authorities as a way to help fund a possible settlement over the questioned fees.
The company said in a news release late Monday that it will put the market service agreement fees into a separate account to be used as part of any restitution agreement it may reach with New York Attorney General Eliot Spitzer.
Marsh said its clients owed about $230 million in incentive fees as of Sept. 30.
Spitzer has accused Marsh & McLennan of bid rigging and using the incentive fees — also known as contingent commissions — to manipulate the sales of corporate property and casualty policies. As a result, businesses have paid more than necessary for their coverage.
A day after Spitzer’s civil suit, Marsh & McLennan said Oct. 15 it would stop collecting such fees. Marsh has said it collected about $1.2 billion in such fees since January 2003.
The incentive fees are over and above ordinary commissions and have prompted the insurance industry to commence a widespread reevaluation of their propriety, with several companies joining Marsh in no longer collecting them and several lawsuits filed on behalf of insurance customers and shareholders.
Two Marsh representatives did not immediately return calls seeking comment.
Last week, Spitzer said any settlement with Marsh & McLennan could reach higher than $500 million, the amount cited in a Wall Street Journal story.
Marsh shares rose 22 cents Monday to close at $27.88 Monday on the New York Stock Exchange. The shares have lost more than 35 percent of their value since Spitzer’s lawsuit.