Risk Management

Ex-Marsh Exec Admits to Bid Rigging

A third former executive at the world's biggest insurance brokerage admits to taking part in the insurance-industry fraud scheme.
Marie LeoneFebruary 25, 2005

Late yesterday, former Marsh Inc. executive Kathryn Winter pleaded guilty to criminal charges in New York County Supreme Court, admitting that she took part in a scheme to defraud clients between 2001 and 2004, according to the office of New York Attorney General Eliot Spitzer.

The charges against Winter were part of Spitzer’s ongoing probe into insurance-industry bid-rigging. So far, 10 employees at four insurance industry companies have pleaded guilty to criminal charges, officials from Spitzer’s office say. Three of those executives were from Marsh, the world’s largest insurance broker and a subsidiary of financial services and consulting giant Marsh and McLennan Cos.

In her plea, Winter, a former broker and managing director at Marsh, revealed that she solicited noncompetitive bids from insurance carriers and then presented those bids to Marsh clients under “false and fraudulent pretenses,” Spitzer said. The attorney general added that the bid rigging “allowed Marsh to control the market, protect incumbent insurance carriers when their business was up for renewal, and maximize profits.”

The felony charge that Winter pleaded guilty to carries a maximum sentence of 16 months to 4 years in prison. Spitzer’s office announced that Winter, who is cooperating with the investigation, is expected to testify in future cases. The nine other executives who pleaded guilty to bid-rigging are also expected to take the stand as witnesses for the prosecution.

“This is an unfortunate but not unexpected development,” Marsh and McLennan spokesperson Barbara Perlmutter told Reuters. “The Marsh and McLennan employees who have entered into plea agreements had worked in the excess casualty unit and we continue to cooperate with the attorney general in ongoing investigations.” The excess casualty unit no longer exists in its previous form, according to the newswire, which added that Marsh’s insurance-placement process has been revamped.

Winter’s attorney David Wikstrom declined to comment on her behalf, according to Reuters.

In October, Marsh chairman and chief executive officer Jeffrey Greenberg stepped down amid charges by Spitzer that the company solicited noncompetitive bids for insurance contracts and then steered its clients to insurers with which it had lucrative payoff agreements.

Then last month, Marsh’s president Michael Cherkasky, who had once been Spitzer’s boss at the New York district attorney’s office, announced that the company would pay $850 million to settle charges of fraud and anti-competitive practices. The company also agreed to reform several of its business practices, Reuters noted.

Marsh’s own statement at the time stressed that none of the payment is a fine or penalty and that it neither admits nor denies the allegations.