St. Paul Travelers Companies, Inc., agreed to pay $77 million to settle charges of illegal business steering, customer allocation, and bid rigging brought by Connecticut, Illinois and New York. The settlement provides $37 million in restitution to policyholders who purchased St. Paul excess casualty insurance through Marsh, Inc., from 2000 through 2004 and provides $40 million in penalties paid to the states: $24 million to New York and $8 million each to Connecticut and Illinois. According to the Assurance of Discontinuance, St. Paul and Travelers paid hundreds of millions of dollars in so-called contingent commissions to insurance brokers and agents, including Marsh, Aon Corporation, Willis Group Holding Ltd., Hilb Rogal & Hobbs (HRH), Arthur J. Gallagher & Co. and Acordia, Inc. Under hidden agreements, brokers and agents steered new business or helped retain existing business for St. Paul and Travelers in exchange for secret commissions. Travelers also improperly deceived its policyholders by establishing ‘service centers’ where Travelers employees posed as the customer’s insurance agent. Customers who called a so-called independent insurance agent like HRH or Acordia were secretly transferred to a Travelers service center employee who did not disclose that they were a Travelers employee. Travelers also entered into secret “book roll” arrangements in which brokers switched thousands of customers to Travelers in exchange for an extra undisclosed fee paid to the broker. Under the customer allocation scheme, Travelers, with The Hartford and CNA, secretly agreed with HRH that insurers would divide up HRH’s small business customers in exchange for paying greater undisclosed contingent commissions to HRH. St. Paul Travelers agreed to cooperate with the ongoing investigation and adopt business practices to eliminate these past violations.