New York state Attorney General Eliot Spitzer brought new charges against several insurance brokers today on allegations of bid rigging.

Spitzer and state insurance superintendent Howard Mills announced the indictment of eight former executives of insurance brokerage firm Marsh Inc. for their roles in what what they call “a massive bid rigging scheme that defrauded clients of millions of dollars.”

The former managers of Marsh, a subsidiary of Marsh and McLennan Inc., are accused of colluding with executives at leading insurance companies to arrange noncompetitive bids and conveying these bids to Marsh clients under false pretenses. Specifically, the indictment charges that from November 1998 to September 2004, the defendants colluded with executives at American International Group, Zurich American Insurance Co., ACE USA, Liberty International Insurance Co. and other companies to rig the market for excess casualty insurance.

According to the indictment, defendants and other Marsh employees told their excess casualty clients that they obtained bids for their business from insurance companies in an open and competitive bidding process. In fact, defendants had rigged the process, Spitzer alleges. He says that by misleading customers into believing that their interests came first, the conspirators fraudulently obtained millions of dollars in commissions and fees for Marsh and millions of dollars in premiums for the insurance companies. The alleged victims ranged from high technology firms to a fruit cannery to a cosmetics manufacturer.

The indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty.

The indictments come after 17 individuals at five companies, including eight former Marsh employees, previously pleaded guilty to criminal charges in the ongoing insurance industry investigation that began a year ago. “These indictments are part of a continuing effort to hold individuals accountable for bid rigging and other illegal activities that defrauded insurance clients,” Spitzer said.

Marsh itself faces no criminal sanctions. After the filing of a civil lawsuit in 2004, the company settled a civil case in January with Spitzer’s office, agreeing to replace top management, apologize for “unlawful” and “shameful” business practices, agreed not to accept contingent commissions, adopted additional reforms aimed at improving transparency and service for insurance customers and set up a US$850 million restitution fund for policyholders. At the time, both Spitzer and Mills praised Marsh for embracing reform and adopting model business practices.

Commenting on the indictment, Michael Cherkasky, president and chief executive of Marsh & McLennan, said, “The criminal charges announced today are not against MMC, but against eight former employees who worked in the Excess Casualty division of Marsh’s former Global Placement department. They stem from the conduct that the attorney general outlined in his civil complaint against MMC last October. MMC and Marsh settled all charges against our companies by the New York attorney general and superintendent of insurance relating to these matters last January.”

“This indictment is about the past. MMC today is focused on the future and is committed to excellence and the highest standards of professionalism and service,” Cherkasky said. He noted that over the past 11 months the company has implemented an unprecedented series of business reforms and compliance initiatives.

Agreements have not yet been reached with ACE, AIG, Zurich or Liberty. In addition to the Marsh settlement, agreements have been reached with the Aon Corporation and Willis North America which will respectively result in restitution to policyholders of $190 million and $50 million along with reforms adopted by Marsh. Other areas of the investigation’s focus include so-called “finite insurance” and insurance industry accounting irregularities.

The defendants are to be arraigned today in New York County Supreme Court. If convicted of the top count with which they are charged, grand larceny in the first degree, several of the defendants face a minimum of one to three years and up to 25 years in state prison. The top count for the remaining defendants, grand larceny in the second degree, carries a maximum term of 15 years.