Aon Accused by N.Y.-N.J. Port Authority of Unauthorized Commissions

By and | April 10, 2014

Aon Plc was sued by the Port Authority of New York and New Jersey which claims the insurance broker kept unauthorized commissions and failed to return premium overpayments, causing the agency to pay millions of dollars more than it should have.

The authority filed the suit in New York State Supreme Court in Manhattan Thursday over a program that provides insurance to contractors and subcontractors working on its construction projects.

Two of London-based Aon’s units failed to submit correct information and data on construction costs to the program’s insurers, didn’t secure policy provisions providing for the return of insurance payments and kept unauthorized commissions that should have been credited back to the agency, according to the lawsuit.

The authority overpaid by more than $50 million over four years ending in 2012, it said.

David Prosperi, a spokesman for Aon, declined to comment on the suit by telephone.

Aon shares fell 3.3 percent to $79.88 in New York trading Thursday.

The authority, controlled by New York Governor Andrew Cuomo, a Democrat, and Republican Governor Chris Christie of New Jersey, operates the region’s three major airports and the World Trade Center site.

Once a vital force in the regional economy, the authority has been sapped by growing deficits at its PATH railroad, cost overruns at the trade center and spending on pet projects for governors of the two states, according to a report last week.

Under Scrutiny

The operations of the agency have been under scrutiny since September, when Christie’s allies closed lanes at the George Washington Bridge in Fort Lee after the town’s mayor declined to support the governor’s re-election. Chairman David Samson resigned last month after a report commissioned by Christie on the bridge affair recommended changes at the agency.

The scandal has former executives and trade groups saying the authority has become a captive of politics at the expense of maintaining crucial infrastructure for the biggest U.S. metropolitan area.

The authority last year fired its treasurer, Anne Marie Mulligan, who worked at the agency for 35 years and oversaw bond issuance and insurance, and two of her staff members for accepting meals and theater tickets on local and international trips, a person familiar with the matter said in May.

The gifts were given by insurance company employees in New York City, London and Zurich in the past year, the person said. The inspector general began probing the Treasury employees after another worker who was fired alerted them to the inappropriate behavior, the person said.

The insurance program, which began in 1986, provides comprehensive general liability and covers risk to builders as well as workers’ compensation to most of the contractors and subcontractors, according to the lawsuit.

The case is The Port Authority of New York and New Jersey v. Aon Risk Services Inc. of New York, 651115/2014, New York State Supreme Court, New York County (Manhattan).

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Topics New York Aon New Jersey

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