March 15, 2006 by Canadian Underwriter
Marsh & McLennan Companies, Inc., is facing charges of bid-rigging in a civil lawsuit recently filed by Florida’s Attorney General Charile Crist.
In the suit, Crist alleges that Marsh & McLenan illegally manipulated insurance markets to obtain improper commissions and engaged in bid-rigging.
In a joint action, the Attorney General’s Office and the Department of Financial Services (DFS) charged Marsh & McLennan and three of its subsidiaries with violations of Florida’s Racketeer Influence and Corrupt Organizations Act (the ‘RICO Act’) and antitrust statutes.
“It is clear that this company took advantage of its clients,” Crist says. “Florida citizens and companies were cheated out of the best rates on insurance and did not receive the honest professional advice they paid for.”
A joint investigation by the Attorney General’s Antitrust Division and DFS led to allegations that Marsh and its affiliates manipulated insurance markets through the practice of contingent commissions, steering business to their high paying insurer partners.
While the majority of Marsh & McLennan clients were large corporations, there were also more than 50 public Florida-based entities as well as some small businesses and individuals.
The Attorney General’s Office issued subpoenas in November 2004 to Marsh and several other insurance brokers and insurers. Investigations into the other companies are ongoing.
Marsh is alleged to have violated Florida’s antitrust laws, Chapter 542, Florida Statutes, as well as the RICO Act. Florida’s antitrust laws allow fines of $1 million per corporate violation. The RICO Act and antitrust laws further provide for restitution up to three times the amount lost due to the unlawful conduct.