The Village of Orland Hills, Ill., sued Arthur J. Gallagher last week, charging that the broker took “kickbacks” and violated the Illinois Consumer Fraud and Deceptive Business Practices Act. The alleged “kickbacks” they refer to are contingent commissions that were undisclosed to the client.
The Village is seeking class action status for its suit, hoping to include all Gallagher clients who were not made aware of contingent commissions.
Disclosing contingent commissions has been a topic of debate for brokers for several years. Earlier this year three of the largest brokers were sued by Anderson, Kill & Olick, a renowned New York law firm, for nondisclosure of these same commissions.
The suit was filed in a Cook County Circuit Court and accuses Gallagher of choosing carriers based on their ability to provide contingent commissions rather than what was most financially advantageous to the Village. Gallagher placed insurance for the Village from 1994 to 1997.
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