updated 4/8/2005 2:47:19 PM ET 2005-04-08T18:47:19

Willis North America Inc., the nation’s third-largest insurance broker, agreed Friday to pay $50 million in restitution to settle an investigation into anticompetitive practices involving incentive fees in property and casualty insurance sales.

An investigation by New York Attorney General Eliot Spitzer and New York state’s insurance department found that Willis steered insurance contracts to companies with which it had fee arrangements and fraudulently misrepresented its operating methods to business clients.

“They were essentially getting kickbacks from these companies,” Spitzer spokesman Marc Violette said. “Is that acting in the best interest of the consumer? Probably not. They should be acting to bring their clients the best insurance coverage at the most competitive price, and they weren’t doing that.”

The settlement with Willis was the third won by Spitzer’s office since the probe was launched last year.

In January, the nation’s largest insurance broker, Marsh & McLennan Cos. Inc., which is based in New York, agreed to pay $850 million in restitution to end Spitzer’s investigation into bid-rigging, price-fixing and the use of hidden incentive fees. Marsh publicly apologized for “shameful” and “unlawful” conduct.

Last month, Aon Corp., the world’s No. 2 insurance brokerage headquartered in Chicago, agreed to pay $190 million and adopt reforms to end the use of incentive fees, which were paid by insurance companies — over and above regular commissions — in exchange for more business.

The funds collected by Spitzer will be returned to the brokers’ clients.

Willis North America is a subsidiary of London-headquartered Willis Group Holdings Ltd.

E-mail evidence
In its investigation of Willis, the attorney general turned up a 2003 e-mail sent by an executive to Willis’ regional marketing officers that said: “I want to see you directing the flow of business to these companies,” naming insurers with which Willis had contingent fee agreements, including Crum & Forster, Chubb Group, St. Paul Travelers Cos. and The Hartford.

As part of the settlement, Willis will accept one payment only for an insurance contract at the time of placement and fully disclose those payments to customers. Willis had started to change many of its practices before the settlement, Spitzer’s office said.

Joe Plumeri, Willis’ chairman and chief executive officer, said in a statement that the company was glad to put the matter behind it.

“Willis is pleased to have resolved this matter with the New York attorney general and the New York insurance superintendent, and we welcome the attorney general’s conclusion that it was not appropriate to file a complaint against our company based on the findings of his investigation.”

He added: “We also are pleased that the investigation found no evidence of the practice of bid-rigging or tying.”

In addition to the three settlements with the brokerage firms, the attorney general has secured guilty pleas to criminal charges from 10 insurance executives implicated in the investigation. They include four former executives of the American International Group Inc. as well as six others from Marsh & McLennan, Zurich American Insurance Co. and ACE Ltd.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 1.97%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.70%
13.70%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.17%
17.17%
Source: Bankrate.com