Willis Group Holdings Ltd. said Friday that it has reached a $50 million national settlement with the New York Attorney General and the state's insurance superintendent to resolve issues raised by an investigation into contingent commissions, and it also announced a separate $1 million settlement with Minnesota.
The company agreed to create a $50 million fund by July 1 to compensate U.S. clients for transactions with Willis from Jan. 1, 2001, until last Dec. 31 that produced contingent commissions. No portion of the fund is a fine or other penalty, Willis said, and it admitted no wrongdoing or liability.
Charges of bid-rigging were settled this year by the world's No. 1 and 2 insurance brokers. Marsh & McLennan Cos., the biggest, agreed to pay $850 million, and Aon Corp. agreed to $190 million. Willis is No. 3.
Joe Plumeri, the chairman and chief executive officer of Willis Group, said in a press release he was "pleased" that Attorney General Eliot Spitzer found it was "not appropriate to file a complaint against our company." He noted that Mr. Spitzer's "investigation found no evidence of the practice of bid-rigging or tying."
As part of the agreement, Willis said it would maintain the ban on contingent commissions it announced last October, as well as adopting practices outlined in a client "bill of rights" that it issued in July. The latter include fully disclosing all compensation that Willis receives for its services; giving enhanced training to its associates on their duties to clients; and prohibiting associates from accepting compensation, gifts, entertainment, or trips from insurers.
Minnesota Attorney General Mike Hatch and Mr. Plumeri said they had agreed that Willis will make payments to its Minnesota clients of $1 million as well as adopting reforms that include additional disclosures to clients and greater transparency in insurance transactions.
"I commend Mr. Plumeri for coming to Minnesota to discuss these issues with me directly and, through his hands-on involvement, forging this agreement," Mr. Hatch said in a release. The agreement calls for Willis to contact by letter Minnesota policyholders who may be eligible for payments. Willis admitted no wrongdoing or liability.
Willis Group is a global insurance broker that sells insurance, reinsurance, risk management, financial and human resource consulting, and actuarial services to corporations, public entities, and institutions. It has more than 300 offices in more than 100 countries and 14,500 associates worldwide, with clients in 180 countries.
