Most Insureds Accept Spitzer Fund Settlement, Reports Broker Marsh

Marsh & McLennan reported that about 70,000 policyholders have opted for payouts from an $850 million fund formed to settle New York Attorney General Eliot Spitzer’s investigation into bid rigging and price fixing.

The insurance brokerage giant said 90 percent of its largest policyholders eligible to participate in the compensation fund have chosen to do so. Those who elected to participate by the Sept. 20 deadline will receive about $750 million of the $850 million settlement.

Payments will be made in four installments: Nov. 1, and June 30, 2006, 2007 and 2008. The payout will include $130 million to customers in California, $94 million to New York clients, $58 million in Pennsylvania and $55 million to Texas clients, the company said in March.

Policyholders that signed up for the deal all agreed to not sue Marsh & McLennan regarding its former business practices.

“We are gratified that so many clients have elected to participate in the fund,” Marsh & McLennan Chief Executive Michael Cherkasky said in a statement. He called it a “broad endorsement by our policyholder clients.”

Marsh & McLennan was accused one year ago by Spitzer of bid rigging, price fixing and using hidden commissions to steer property and casualty insurance contracts. The company agreed in January to pay $850 million in restitution to settle Spitzer’s allegations.

The insurer also faces a civil lawsuit filed by Connecticut Attorney General Richard Blumenthal, accusing it of illegally steering an $80 million state contract to ACE Financial Solutions Inc.

Marsh & McLennan as a corporation faces no criminal sanctions. The insurer has been named in other civil litigation, and in June was named as a defendant in a securities lawsuit filed against specialty insurance and treaty reinsurance company Axis Capital Holdings Ltd.