Tying refers to a practice where a broker awards its client's business to a particular primary insurance carrier--in return that carrier places its reinsurance through the same broker or an affiliate.

Industry experts say contingency fees and "Placement Service Agreements," as well as tying, are most likely legal?no matter how unethical they might appear to certain regulators. It's only when these practices are clearly linked to blatantly illegal activities like bid-rigging?as Mr. Spitzer alleges in the Marsh & McLennan case?that they can become legal problems.

Brad Maione, spokesman for the Office of New York State Attorney General Eliot Spitzer, declined to comment directly on whether Mr. Spitzer is looking into tying practices for any brokerage firms, but he told National Underwriter, "The investigation is ongoing. We filed our first case against Marsh and going forward, there may be other actions in the future in regard to other practices and issues."

Standard & Poor's Ratings Services analyst Steven Ader said it's important to keep in mind that there are currently no proven allegations that any of the major brokerage firms are using this practice in any potentially illegal manner, or even that they use this practice at all.

"Tying is where a broker would go to an insurance company and say, ?If you want us to sell your product, you have to use us for the placement of reinsurance,'" Mr. Ader said. But he said it would be difficult to prove whether such practices, if they exist among brokers, actually constitute illegal activities. "How illegal is it? It's a gray area," Mr. Ader said.

Fitch Ratings Senior Director Peter Patrino added, "I'm not sure how common they are. I think that's part of the uncertainty that just abounds in the marketplace right now."

He said his understanding is that "if a primary insurer is giving a promise to a broker that they will use that broker to help them with their own reinsurance programs; it might help the primary company get some additional business."

Mr. Patrino noted that, "Obviously the major players and various brokerage markets would be candidates given the concentration in the marketplace; but again, this is all speculation right now."

But while the practice of tying has not been in the public spotlight the way broker incentive payments that go under a variety of titles have, some consumer advocates have been watching its development for some time.

Last year, the Washington, D.C.-based nonprofit advocacy group National Consumers League sent a letter to Mr. Spitzer and other attorneys general around the country urging them to investigate the tying arrangements because "insurance companies are often discouraged from retaining brokers who could find them the best reinsurance coverage."

The letter went on to say that insurance companies, "fearful of losing lucrative primary insurance referrals, allow themselves to be held hostage by the broker," according to the National Consumers League.

Guy Carpenter & Company Inc., Marsh Inc.s' reinsurance brokerage unit, as well as Aon Corp. reinsurance unit Aon Re Worldwide and Willis Group Holdings Limited declined to comment for this article. But one industry observer said tying arrangements have been a very common practice among major brokerage firms for years.

"It's been a very, very common practice. That's why all the major retail insurance brokers had expanded into the reinsurance brokerage business," said Andrew Barile, a reinsurance consultant based in Rancho Santa Fe, Calif.

He said the practice came into being when primary brokers got into the captive insurance business. "So for example, Marsh would do a feasibility study to start a captive insurance company and then its reinsurance brokerage Guy Carpenter would place the reinsurance of the captive insurance company."

Over the years, he said, "it's become a common practice that the retail broker and the reinsurance broker work hand in hand."

Mr. Barile, who also used to run his own reinsurance brokerage firm, added that, "We used to call this ?orchestrated reinsurance.' It's a common, clever financial strategy to increase revenues. It's part of a very good strategy?but in my view, it's not illegal."