Thursday, September 15, 2005
New York Attorney General Eliot Spitzer announced the indictment today of eight former executives of March Inc., one of the insurance subsidiaries of Marsh & McLennan Cos., on fraud, antitrust, and larceny charges related to bid-rigging for insurance quotes. According to a press release (here) issued by the AG's Office:
[D]efendants 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, 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. The victim companies ranged from high technology firms to a fruit cannery to a cosmetics manufacturer.
Marsh Mac settled a civil complaint earlier this year that requires the company to set up an $850 million restitution fund. (ph)