Last year the media was full of stories reporting on lawsuits against some of the largest insurance brokerage firms alleging they had engaged in fraudulent activities by steering unsuspecting clients to insurers with whom the brokers had lucrative payoff agreements while also soliciting rigged bids from insurance providers. The lawsuits were related to numerous types of insurance including workers compensation, employee group benefits, property and casualty and liability.  In early 2007 several settlement agreements were reached where in addition to significant fines and penalties the agreements specified that the subject brokers and insurers had to make restitution to its policy holders.

The audit guidance was issued to remind auditors that they should ensure that contractors who obtained insurance through one of the brokers or providers listed below and received payment should reflect any credit to the government in accordance with FAR 31.201-5, Credits.  The guidance states auditors should ensure the government receives an equitable share of the amounts received by contractors. The guidance identifies those brokers and insurers who have entered into settlement agreements as Marsh & McLennan, AIG, AON Corporation, Willis North America, ACE Ltd., St. Paul Travelers, Prudential and Met Life (07PAC-029(R).

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