A Milwaukee bank has filed suit in federal court against Marsh & McLennan Companies claiming that its brokerage subsidiary Marsh steered its insurance business in exchange for hidden fees.
The suit, filed Dec. 16 in the U.S. District Court in Milwaukee by Marshall & Ilsley Corp., charges that Marsh violated its fiduciary responsibility by accepting commission fees in return for the placement of insurance with certain companies. M&I said it was unaware of the commission practice.
The company also asserts that Marsh benefited from the payment of premiums to it directly, instead of the carrier, by placing the money in a unit where it earned interest for the firm before payment was made to the insurer.
M&I claims the amount would exceed $75,000 and is seeking return of brokerage fees, monies paid to the firm in the form of kickbacks or other hidden consideration or profits, prejudgment interests, costs and attorney's fees, and punitive damages. The suit does not set a dollar amount for the recovery M&I is seeking.
The action by Marshall & Ilsley Corporation follows settlement of a civil suit against MMC brought by New York Attorney General Eliot Spitzer alleging that Marsh executives engaged in kickback and placement schemes with insurers in exchange for lucrative contingent commission fees.
In October, MMC announced that half of its clients had opted to take part in an $850 million settlement providing restitution for improper contingency fee charges. The company said that the majority of its largest clients opted-in to the plan.
M&I alleges that New York-based Marsh failed to look out for the best interests of the bank by obtaining "the lowest possible price" for insurance after agreeing "that Marsh would act solely in the best interest of M&I in procuring its policies."
It also said it paid Marsh brokerage fees to perform this service.
M&I is a diversified banking institution founded in 1847. The bank has $47 billion in assets with 195 offices throughout the state and locations in Arizona, Minnesota, Nevada, Florida, Missouri and Illinois.
A representative from M&I did not return a call for comment.
A spokesman for Marsh said the company does not comment on ongoing litigation.
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