February 6, 2005 by Canadian Underwriter
In a conference call last week, ACE Ltd. CEO Evan Greenberg says the insurer will ask the court to dismiss civil charges filed by Connecticut Attorney General Richard Blumenthal.
Blumenthal filed the civil case late last month, alleging ACE paid broker Marsh a “secret” US$50,000 commission to steer a US$80 million state contract to the insurer.
In a conference call following release of ACE’s fourth quarter 2004 financial results, Greenberg stressed that the insurer would fight the charges. He added that an independent internal review has revealed no evidence of wrongdoing by ACE employees other than earlier disclosed problems at its excess unit which followed the investigations of bid-rigging by New York Attorney General Eliot Spitzer. “To date nothing has been discovered that smells anything like what we had found in that excess unit,” Greenberg says, adding that the review will be completed by the end of February.
Asked what he expected to see in terms of a replacement for contingent commissions, given that most large brokers and several insurers including ACE have abandoned the practice, in the U.S. at least, Greenberg says his company has no discussions underway with brokers about increasing base commissions. “The industry needs to look at itself and drive its own reform process. We believe brokers should be compensated by those they work for, their clients,” he said.