MMC also agreed to other corporate reforms including the banning of contingent commissions and full disclosure of compensation to clients.

"I am pleased that Marsh settlement reforms will be enforced nationwide because of our agreement," said Mike Kreidler, Washington Insurance Commissioner and chairman of the NAIC subgroup that negotiated the agreement. "It clearly helps move the entire commercial brokerage industry to a higher ethical standard."

In a statement, Michael G. Cherkasky, president and chief executive officer of MMC, said, "This agreement represents an important step forward for Marsh and a reaffirmation of Marsh's commitment to business reform."

Separately, Massachusetts Attorney General Tom Reilly is threatening to sue Marsh & McLennan Companies Inc. if a settlement can't be reached over allegations that the firm did not serve the state's insurance clients properly.

In a letter to Mr. Cherkasky dated Sept. 8, the attorney general's office said it has reason to believe the New York-based insurance firm engaged in "unfair or deceptive acts or practices" violating the state's consumer protection law.

MMC filed an 8-K on Sept. 12, advising that an attorney general intended to sue the firm if a resolution could not be met, but the company did not name the attorney general in the filing.

A total of 17 companies allegedly harmed by MMC were named in the attorney general's letter, but the attorney general indicated the list was not limited to the 17.

Early last week, the attorney general's office did not respond to a request for comment on the status of the action.