12 Years Later…… Do Undisclosed, Secret, Back Door Agreements Still Exist?


Do insurance agents, brokers and consultants still receive undisclosed compensation from the vendors they recommend? 

By Molly Mulebriar

A recent assignment has reaffirmed the practice. Hired to review a self-funded health plan managed by an Agent of Record and an insurance consultant (yes, you read that right, the group employed both at the same time), we followed the money. Disclosed broker compensation of approximately $130,000 ended up in excess of $600,000 with the addition of fees / commissions to which the plan sponsor was unaware. This does not include any kind of bonus arrangement found to be fairly common within our industry which, if applicable to this case, would drive up the compensation to a higher level.

The following case back in 2005 illustrates the practice of earning undisclosed compensation in the market that continues to this day:


For years, Connecticut consumers, including numerous municipalities and educational institutions, have paid hundreds of thousands of dollars to Aon Consulting to obtain the best professional advice so that they could get the best insurance coverage for the best price.

Aon, in violation of its fiduciary duties to its clients, and insurers including Aetna, Inc. and Anthem Blue Cross Blue Shield, entered into undisclosed, secret, back-door agreements to receive ‘bonus’ commissions, also called overrides or contingent commissions, which were in essence, kickbacks, to steer or retain business.

Aon fought hard for these “pay-to-play” bonuses and Aon and Aetna and Anthem worked hard to make sure the Connecticut consumers did not know – or fully understand – the true nature of these agreements.

Even in cases where brokers had contracts with their clients obligating disclosure or were required to disclose these excess commissions on IRS forms, Aon did not inform its clients of these payments even when clients asked, a silence and deception that Aetna and Anthem were at least complicit in.

The costs of these hidden payments to brokers — payments generally much higher than the fees paid by the clients to the brokers — were folded into the overall premiums paid. This generated higher costs for all consumers including municipalities and educational institutions, a fact that was fully recognized by both the brokers and the insurers.

Ultimately, consumers and municipal taxpayers were harmed, and the free and open market for insurance was crippled by these deliberate and unscrupulous practices.


Additional Reading:

Padding the School Policies?

“Defendants have fraudulently obtained millions of dollars from Texas school districts in consultant fees,” the suit states. It seeks to have Mercer’s revenues forfeited and triple damages awarded to those covered under Mercer-influenced contracts.

Marsh & McLennan and Mercer are accused of racketeering, fraud, abusing the financial trust with school districts, bid-rigging, deceptive trade practices and violations of the state’s insurance code.

The suit states that Rupa Mathur was both an insurance agent and consultant as well as benefits manager with HISD. While with the district, the suit alleges, she received about $250,000 from insurers, including about $24,000 from a Marsh insurance firm.