Florida, eight other states and the District of Columbia said they have reached a settlement with the Travelers Cos. in what they said was a "pay-to-play" scheme orchestrated by insurance broker Marsh & McLennan.

Travelers will pay a multistate task force $6 million to resolve allegations of improper business steering in the commercial insurance market. That activity resulted in higher premiums being paid by Florida governmental entities, companies and nonprofit organizations, according to a statement by Attorney General Bill McCollum, Chief Financial Officer Alex Sink and Insurance Commissioner Kevin McCarty.

"Policyholders have every right to expect fair and honest treatment from their insurers," McCollum said. "We will continue to aggressively demand accountability and transparency from the insurance industry in Florida."

Travelers allegedly conspired with Marsh & McLennan and other brokers to create the illusion of a competitive bidding process by submitting fake bids even though the brokers had already determined which insurer would receive a particular policyholder's business, the Florida officials said.

Travelers paid "contingent commissions" to these brokers, and these commissions were not disclosed to policyholders, they said.

The Florida Attorney General's Office, Department of Financial Services and Office of Insurance Regulation will receive a combined $1.1 million of the settlement. The money will fund a reimbursement pool for affected public entity policyholders and repay the state agencies' costs of investigation.

In addition to the financial settlement, Travelers has agreed to a consent decree and final judgment that will provide comprehensive injunctive relief, including a requirement to disclose compensation that Travelers pays to insurance brokers.

Travelers also will be required to disclose to all customers and prospective policyholders the ranges and averages of payments it made to insurance brokers on specific lines of insurance.

The consent decree and final judgment will be filed in Leon County Circuit Court this week.

Travelers has cooperated with the multistate task force and will provide assistance to the states as they continue their investigation of insurance brokers and other insurers. The company has already reimbursed a nationwide group of policyholders for overcharges and has adopted significant business reforms that govern its bidding and underwriting practices.

The settlement is the third agreement Florida has reached with insurance carriers involved with Marsh & McLennan's illegal tactics.

Similar settlements were announced in October with ACE Group Holdings and in December 2006 with Zurich American Insurance Co.

In addition to Florida, the following states following seven states and the District of Columbia participated in the investigation and settlement: Hawaii, Maryland, Massachusetts, Michigan, Oregon, Texas, West Virginia and Pennsylvania.

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