Piece of Marsh's $850 Million Pie
Hundreds of colleges received letters from Marsh Inc. this week informing them that they were eligible for some of the $850 million in funds that the company set aside to resolve an investigation into its business practices by the New York State attorney general's office.
It is not clear exactly how many colleges received the letters or how much money higher education institutions collectively are in a position to receive. But Marsh has hundreds of colleges as clients, either as its insurance broker or as a consultant on risk management and other issues, and several experts in risk management and insurance estimated the latter figure in the $5 million to $15 million range.
New York announced in October that it was investigating charges that Marsh steered clients' insurance business to favored insurance companies, in some cases by soliciting fictitious bids.
In January, Marsh and the state announced that as part of a settlement agreement, in which the company acknowledged no wrongdoing, Marsh had agreed to set aside $850 million from which it would pay restitution to companies and organizations in the United States that had policies or business arrangements that produced commissions for Marsh between January 2001 and December 2004. (The company also announced that it would adopt a series of reforms in its business practices.)
The company sent letters to each policy holder on May 20, in which it laid out the insurance policies Marsh had arranged for it, the premiums or consulting fees paid by the client, and the amount each client is eligible to receive from the restitution fund. Institutions have until September to file a claim through the fund.
The National Association of College and University Business Officers sent an e-mail to its members and posted guidance on its Web site alerting campus business officers about the offer from Marsh. The association's guidance does not take a stand on whether its members who are Marsh clients should participate in the settlement.
"Our biggest concern was just to let members know that these letters were going out," said Anne Gross, vice president for regulatory affairs at NACUBO. "We don't know exactly where this will hit on a given campus, and we wanted to bring it to our members' attention so they can go look for it."