Marsh & McLennan hit by fresh Florida lawsuit

Click to follow
The Independent Online

The legal battles that engulfed the world's largest insurance broker, Marsh & McLennan, in 2004 are still not over - one year after the company paid $850m (£480m) to settle with the New York Attorney General, Eliot Spitzer.

The state of Florida has launched a new lawsuit against Marsh, claiming further compensation over a commissions scandal in the insurance market.

"Marsh and its affiliates were more interested in getting kickbacks than the best deals for their clients," said Tom Gallagher, Florida's chief financial officer.

Marsh professed itself stunned that Florida was holding out for more, when many local businesses and even the state itself have already made claims on the $850m compensation fund set up under the Spitzer settlement.

Florida's move is unwelcome because Marsh is only beginning to recover from the effects of the scandal, which prompted big changes in the way it does business in the US and across the world, including at the Lloyd's of London insurance market. Some 750 people lost their jobs in London in the shake-out.

Marsh has abandoned lucrative "contingency commissions", where it receives a fee for steering business to an insurer, based on the volume and type of cover. Mr Spitzer accused the company of rigging bids and fixing prices, and steering business to insurers that paid higher fees.

Mr Gallagher claims that the $850m figure understates the true losses to insurance purchasers, perhaps by as much as 50 per cent. He says the abuses went deeper and lasted for longer than the Spitzer case allowed.

Under Florida law, plaintiffs can recover up to three times any money lost due to unlawful conduct. Marsh could also lose its licence to do business in the state. The new claim could stretch to tens of millions of dollars. Mr Gallagher says Marsh and its affiliates brokered around 15,000 insurance contracts in Florida between 1998 and 2004.

Comments