National Insurance Settlement Terms Being Met

Aon Corporation and Arthur J. Gallagher complying with terms of 2005 agreement

CHICAGO – Today the Illinois Department of Financial and Professional Regulation (IDFPR), Division of Insurance, issued its report on compliance with the 2005 nationwide settlement agreements with Chicago-based Arthur J. Gallagher & Co and Aon Corporation.  The Division found that insurance brokers Aon and Gallagher are complying with the terms of settlement agreements.  

The companies settled with the Attorney General and the IDFPR 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. Aon and Gallagher are major providers of insurance brokerage services in Illinois, the United States and internationally.

“As a result of this settlement both companies have renewed their commitment to honesty, integrity, transparency, and are providing detailed information to their clients. Both Aon and Gallagher have cooperated fully with the Division and are complying with the terms of the settlements,” said Michael T. McRaith, Director, Division of Insurance. “Their customers can be confident that their needs will not be short changed for quick profits.”

The Division released two reports by consultant Grant Thornton LLP.  The Division monitored both companies for compliance with the agreements. The Division found that both restitution funds, $190 million for Aon and $27 million for Gallagher, had been appropriately funded and disbursed.  The Division audited the companies' compliance with the original settlement agreements as well as Aon's compliance with the Multi-state Regulatory Settlement Agreement between Aon and a number of State insurance regulators.

The disclosure requirements were reviewed and both companies were in substantial compliance with the settlement agreement. Disclosure to clients is required when quotes are sought and received on behalf of those clients when a policy is placed, renewed, or otherwise serviced.  Any compensation the broker receives in connection with those quotes must be disclosed and consented to by the client.

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 Division 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.