Insurance Industry Under Fire: Attorney General Eliot Spitzer Cracks Down on Corruption

The property and casualty insurance industry is facing a broad and deep corruption case, according to New York State Attorney General Eliot Spitzer, who has sued the nation's largest insurance brokerage, Marsh and McLennan, for allegedly rigging bids and steering clients to certain insurance carriers. The investigation, which has been ongoing since the spring, has resulted in the indictment of two AIG executives and allegations that Marsh earned $800 million in commissions last year alone, roughly half of its annual income.

Key Takeaways:

• The lawsuit against Marsh and McLennan alleges that the company steered clients to certain insurance carriers in exchange for lucrative payoffs, resulting in higher costs for consumers and big corporations.
• New York State Attorney General Eliot Spitzer has accused Marsh and McLennan of rigging bids, using fake bids, and no bids to ensure that they could control the market.
• The investigation has resulted in the indictment of two AIG executives, who will testify in future cases.
• The victims of the scheme include big corporations, small businesses, local governments, individuals, and school districts.
• Marsh and McLennan have stated that they take the allegations seriously and have been cooperating with the attorney general's investigation since it began in the spring.
• Hartford Financial Services has also stated that it is cooperating with the investigation.

Statistics:

• Marsh and McLennan earned $800 million in commissions last year, roughly half of its annual income.
• The lawsuit alleges that Marsh and McLennan steered clients to certain insurance carriers in exchange for payoffs, resulting in higher costs for consumers and big corporations.
• The investigation has resulted in the indictment of two AIG executives.
• The victims of the scheme include big corporations, small businesses, local governments, individuals, and school districts.

Sources:

• CNNfn - Street Swee, with Allan Chernoff, Fred Katayama
• Citations:

- "We take very seriously the allegations made public by Attorney General Spitzer today. We have been cooperating with attorney general`s investigation since it began in the spring." (Marsh and McLennan statement)

- "He said it's more than just property and casualty insurance. New York State Attorney General Eliot Spitzer outlined a wide scale case of corruption plaguing the insurance industry." (CNNfn - Street Swee with Fred Katayama)