Eight more indicted by Spitzer in insurance probe - Managed Care ...

For those who thought New York Attorney General Eliot Spitzer's investigation into the insurance industry was fading away, the news that eight former Marsh executives have been indicted on various charges served notice that if anything, Spitzer et al are just now hitting their stride.

According to Insurance Journal ;

"The former executives are accused of colluding with executives at leading insurance companies to arrange noncompetitive bids and conveying these bids to Marsh clients under false pretenses…The indictment charges that from November 1998 to September 2004, the defendants colluded with executives at American International Group, Zurich American Insurance Company, ACE USA, Liberty International Insurance Company and other companies to rig the market for excess casualty insurance .

According to the indictment, defendants and other Marsh employees told their excess casualty clients that they obtained bids for their business from insurance companies in an open and competitive bidding process. In fact, the indictment maintains, defendants had rigged the process in the following ways: First, before any bids were submitted, the defendants determined which insurance company would win the business. Second, they set a "target" for the winner to submit as its bid. Third, they obtained losing bids, which they called "B quotes," from other participating insurance companies .

By misleading customers into believing that the customers' interests came first, the conspirators fraudulently obtained millions of dollars in commissions and fees for Marsh and millions of dollars in premiums for the insurance companies, according to Spitzer's charges. The victim companies ranged from high technology firms to a fruit cannery to a cosmetics manufacturer."

Notably, Marsh itself, who has already settled w Spitzer et al, was not indicted in this latest round.

Aon and Willis, two other top brokers, have also agreed to pay restitution totaling over $300 million. Among the insurers accused of improper/illegal activity, ACE, AIG, Zurich and Liberty have not yet reached resolution with Spitzer .

Given their status, it is highly likely these carriers will find themselves in the news in the near future. And, given Spitzer's proven ability to obtain testimony from one party against other subjects, the new indictments may enable the AG to gather more precise information on the activities, transgressions, and participants in same in the insurance industry.

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