Looking back

Chubb Corp.'s settlement with Eliot Spitzer and other states' attorneys general comes nine years after the insurer was at the center of another controversy over contingent commissions it paid to Marsh & McLennan Cos. Inc.

In 1997, it was a leaked Marsh memo detailing the brokerage's commission arrangements with Chubb that sparked fears among risk managers over Marsh's use of its now disbanded Global Broking Center to maximize its contingent commission income (BI, Oct. 13, 1997).

In the memo, a Marsh executive issued a directive to regional managers instructing them to place the majority of their middle market property/casualty business with Chubb through the Global Broking Center to increase the unit's income from so-called placement service agreements.

Release of the memo ignited concerns over the use of centralized placements and contingent commissions among individual risk managers and the Risk & Insurance Management Society Inc. Those concerns led to discussions between the brokerage and RIMS that resulted in an agreement by Marsh to disclose, on request from policyholders, some information about is contingent commissions.

Over the next few years Marsh said few risk managers requested the information and the furor over contingent commissions subsided until it erupted with much more intensity when Mr. Spitzer filed suit against Marsh in 2004 charging the brokerage with fraud.