Caterpillar states that it places two major areas of coverage through Aon: casualty/liability coverage (including, but not limited to, general commercial liability, auto, warehousemen’s legal liability, aviation, employer liability, professional responsibility, medical liability, and excess, plus a significant umbrella element) and executive coverage (including, but not limited to, directors and officers, errors and omissions, fidelity, and fiduciary coverage).
Caterpillar alleges that one of Aon’s responsibilities has been to assist Caterpillar with its competitive bidding process for annually renewable insurance polices. These alleged duties include helping Caterpillar prepare requests for quote, assisting with identifying insurance carriers willing to write policies to cover Caterpillar’s particular risk management needs, assisting Caterpillar in compiling and presenting to carriers the information they need to write their quotes, and assisting in obtaining and evaluating the bids.
Caterpillar alleges that for most of its relationship with Aon, Aon was compensated through “traditional” broker commissions on a policy-by-policy basis out of the premiums paid. The Complaint alleges that beginning in the late 1990s Aon requested the payment of additional money for its brokerage services, which would be paid directly by Caterpillar. Caterpillar agreed to a minimum brokering fee of approximately $500,000, instead of fees based on a percentage of policy premiums.
As a result, Aon and Caterpillar negotiated and signed a written “Service and Retainer Agreement” (the “SRA”) effective for calendar year 2001. According to the Complaint, pursuant to the SRA, Aon agreed to provide insurance broking and other services for Caterpillar in exchange for a fee. “However, Aon agreed to offset the specified fee by ‘any actual and pre-paid commissions.’” Caterpillar alleges that during the period 2001-2004, Caterpillar’s cost of insurance rose significantly.
The Complaint refers to the investigations conducted in 2004 by various states’ attorneys general into the business practices of the insurance industry. Caterpillar states that “[a]ccording to the lawsuits brought by the authorities, Aon and other brokers entered into secret agreements with some major insurance carriers to provide the brokers additional, undisclosed compensation in return for their placing their clients’ insurance business with the carriers.” The Complaint alleges that Aon began this conduct at least as early as 2001, and that “Aon steered clients toward particular insurers with whom Aon had such agreements.”
After Aon settled its portion of the investigations in March 2005, Caterpillar alleges that it attempted to determine whether the agreements affected Caterpillar, and, if so, to what extent. The Complaint alleges that although Aon intimated that it would be willing to cooperate, it did not do so.