Marsh & McLennan has agreed to settle the lawsuit brought by New York Attorney-General Eliot Spitzer for $US850 million. The money will be paid over four years to a fund which will compensate Marsh clients which were duped by company officers involved in price-rigging and secret commissions.

While the settlement has been welcomed by observers in the US, they have pointed out that the deal negotiated by Marsh CEO Michael Cherkasky is not likely to remove prosecutions being mounted by other states, or the spate of civil lawsuits expected to come in the next few months. Marsh is also reported to be bleeding clients, and its share value is 30% lower than it was when the Spitzer action began in October.

In an interview in New York yesterday, Mr Cherkasky said he is “enormously sorry that we employed people who went outside the scope of what we expected them to do and broke our rules and regulations”.

“At the same time we as a corporation are pleased that none of the regulators, nor when we looked at it ourselves, have found a systemic pattern promoted by the company of illegality.”

He also said he hoped the settlement with Mr Spitzer will provide “a measure of closure” on litigation being brought by other states.” We are very hopeful [regulators in other states] will see what we’ve done, take note of it and that we will be able to move forward quickly. But he admitted civil lawsuits “are not going to go away overnight”.

That may be hoping for too much. Mr Spitzer told the National Press Club in Washington DC yesterday the insurance industry “has corruption that is rife throughout it”, and that “many more” prosecutions will be brought.

He said corruption touches every line of insurance “and the result is higher premiums”.