New York State
Eric R. Dinallo Superintendent of Insurance 25 Beaver Street New York, N.Y. 10004
|ISSUED 03/31/2008||FOR IMMEDIATE RELEASE|
An outside consultant’s review of current producer compensation practices at insurance brokers Marsh and Willis has found both companies are complying with the terms of settlement agreements with New York’s Insurance Department and Attorney General, First Deputy Insurance Superintendent Kermitt Brooks announced today.
The companies settled with the state agencies in early 2005 in order to resolve concerns about anticompetitive practices, agreeing to provide restitution to policyholders and adopt business reforms designed to avoid conflicts of interest. Marsh is the nation’s largest insurance broker, and Willis the third largest.
“To their credit, both companies have cooperated fully with the Department and are living up to the terms of the settlements,” Brooks said. “They have extensively revised their compensation practices so clients can be confident transactions are transparent and conflicts of interest are avoided.”
The Department today released two reports by consultant RSM McGladrey. The Department had engaged RSM to monitor and test both Marsh and Willis for compliance with the agreements. Such compliance also is pertinent to subsequent Multistate Regulatory Settlement Agreements patterned after the New York Department's agreements with the companies.
RSM found that both restitution funds – $850 million for Marsh and $50 million for Willis – had been appropriately funded and disbursed, with more than 99% of the settlement checks already cashed.
The consultant also found general compliance with disclosure requirements. These include disclosing to clients quotes sought and received on behalf of those clients whenever a policy is placed, renewed, or otherwise serviced. Any compensation the broker would receive in connection with those quotes must be disclosed and consented to by the client. This ensures that the client is fully aware of all available options. To help prevent conflicts of interest, employees of the brokers are also prohibited from accepting gifts of material value from insurers.
The companies are required to make annual disclosure to clients of compensation received during the preceding year or contemplated to be received in connection with their business. The companies must also file an annual report with the Department listing the amount of each type of compensation it received from insurers during the previous year. Both companies were found to have made good faith efforts to comply.
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