Mr. Brown added that, "Contingent commissions, and the conflict of interest such commissions create, need not be a part of the insurance business. We appreciate Chubb's leadership in finding better ways to compensate agents and brokers."

Mr. Spitzer's office said their investigation found Chubb had made undisclosed payments to insurance brokers and agents that encouraged them to steer business to Chubb.

Included in the settlement documents are descriptions of loans Chubb made to brokers and agents where the loan interest and the principal would be forgiven if the broker or agent delivered an agreed-upon increase in business to Chubb. The company said it has ended these practices.

According to the New York Attorney General's office, these arrangements "created a conflict of interest for brokers and agents who owed their clients fiduciary duties of care, full disclosure and loyalty."

Mr. Spitzer's office noted that the Chubb settlement is the latest from its probe of the insurance industry, which began in fall 2004. To date, it said, their investigation has resulted in guilty pleas by 20 insurance company executives and officers, and the recovery of approximately $3 billion for commercial consumers and workers compensation plans.

Chubb said it cooperated fully in the investigations--which were augmented by its own independent inquiry.

Although Mr. Spitzer's office said it found evidence of steering, Chubb said it was "pleased' the investigation did not conclude the company participated in a pattern or practice of illegal bid-rigging in the excess casualty insurance market.

Chubb also said that the payments it would make were not a "fine or penalty." Chubb said it was making the payment because it acknowledges the company "appears to have unknowingly benefited from the bid-rigging activities of others in the excess casualty market, which may have provided Chubb with an advantage in retaining certain renewal business."

The company said it would replace contingent commissions with a supplemental compensation program "that will reward Chubb's agents and brokers for superior performance in a manner consistent with evolving marketplace standards and reforms urged by the Attorneys General."

John D. Finnegan, chairman and chief executive officer of Chubb, said, "The Attorneys General are to be commended for raising important questions regarding a number of insurance industry practices."

Mr. Finnegan said the company has voluntarily "undertaken substantial business reforms over the past two years, culminating with today's announcement of a new producer compensation model that recognizes the important services provided by independent agents and brokers."

Chubb said the investigation had done a service by identifying and "detailing a corrupt scheme of collusive bid-rigging in excess casualty insurance placed by one national broker" and had prompted a "healthy re-examination of some of the industry's longstanding compensation practices which created potential conflicts of interest if not disclosed or properly managed."

The company said it heeded remarks by Mr. Spitzer last year urging industries under investigation to reform themselves and adopted a Legal Compliance and Ethics Charter. Chubb said it has created a chief ethics officer, disclosed on its Web site all forms of producer compensation and ended use of an entity co-owned with its producers (Mountain View Indemnity) to reinsure certain risks.

Chubb noted it has also sold its personal lines brokerage subsidiary; hired Promontory Financial Group to examine its non-traditional insurance products; imposed guidelines on the ability of its former subsidiary, Chubb Re, to write finite reinsurance, and restructured its reinsurance operations from direct ownership to a 16 percent minority interest in an independent company.

The insurer said a summary of its independent inquiry, conducted by Stier Anderson LLC, is available online at www.chubb.com.