Florida Agencies Announce $4 Million Insurance Settlement With Aon Corp.

Florida Attorney General Bill McCollum, Chief Financial Officer Alex Sink and Insurance Commissioner Kevin McCarty today, May 23, 2008, have issued a joint announcement that Florida has reached a settlement with Aon Corp., a large insurance broker that received undisclosed compensation in connection with the placement of insurance coverage on behalf of Florida policyholders.

As part of the agreement, Aon will pay $2.6 million to the State of Florida to reimburse affected policyholders.

Aon also will reimburse the three Florida agencies $1.4 million in fees and costs, to be paid within 10 days of this agreement.

The joint press release is reprinted below.

 

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Florida Agencies Announce $4 Million Insurance Settlement With Aon Corp.

TALLAHASSEE, Fla. – Attorney General Bill McCollum, Chief Financial Officer Alex Sink and Insurance Commissioner Kevin McCarty today announced that Florida has reached a settlement with Aon Corp., a large insurance broker that received undisclosed compensation in connection with the placement of insurance coverage on behalf of Florida policyholders.

As part of the agreement, Aon will pay $2.6 million to Florida to reimburse affected policyholders. Aon also will reimburse the three Florida agencies $1.4 million in fees and costs, which will be paid within 10 days of this agreement.

“Insurance customers, including government entities, need to know what they are getting for the premiums they are paying,” said Attorney General McCollum. “Consumers deserve transparency and taxpayers deserve to be treated fairly.”

The three-agency investigation determined that Aon brokered multiple insurance contracts in Florida from 1998 through 2004 and its clients included several public entities in the state of Florida, including city governments and school boards. Insurance brokers represent their clients by advising them on their insurance needs and options and represent the clients when negotiating the price and terms of insurance coverage offered by insurance companies.

Through the investigation, authorities uncovered allegations that Aon improperly collected undisclosed compensation when it placed various insurance coverages with insurance companies. Undisclosed compensation is any form of compensation that is paid to the broker but not reported to policyholders before binding the transaction for the purchase of a policy.

“Florida is committed to ensuring that insurance transactions are both transparent and fair,” said CFO Sink, who oversees the Department of Financial Services. “When we determine that an insurance broker is not clearly disclosing the amount and nature of all fees and commissions, we will take decisive action on behalf of Florida consumers..”

“Full disclosure in all insurance transactions is a must, and Florida consumers deserve nothing less,” said Commissioner McCarty. “My office is committed to protecting Floridians, and this settlement further demonstrates the progress Florida is making toward establishing a national standard for transparency in insurance transactions.”

Prior to having insurance bound, Aon must disclose to its clients all fees, compensation and commissions associated with each insurance transaction. The company must also maintain a record of all insurance quotes it receives. This settlement marks the seventh agreement Florida has reached with insurance carriers and brokers alleged to have received compensation in an improper manner.

 

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