Title
Acceptance of the Voluntary Settlement Agreements from Arthur J. Gallagher & Company (B)
This item involves the acceptance of the Voluntary Settlement Agreements related to the Fund established in Illinois to repay portions of contingent commissions received by Arthur J. Gallagher & Company.
Explanation
On May 18, 2005, Arthur J Gallagher & Company entered into an agreement with the Illinois Division of Insurance and the Illinois Attorney General to resolve issues related to the receipt of contingent commissions. Contingent commissions are additional revenues received by a broker based on such things as gross volume, new business and favorable loss experience on policies placed by the broker. The fund was established to repay portions of the contingent commissions received by Arthur J. Gallagher & Co. Many other large brokers have entered into similar agreements throughout the country. The City of Gainesville received notice from Arthur J. Gallagher & Co. that the City was eligible to receive compensation from the fund for contingent commissions received on some City-purchased insurance policies.
The total amount of the funds set aside for the City of Gainesville is $48,277.28, and is unrelated to any other funds due to the City of Gainesville related to the over-retention of commissions. Based on conversations with the City Attorney's Office, it was determined that the City should wait until resolving the interest due on the over-retention prior to accepting the Voluntary Settlement Agreements related to the Illinois Fund. The City has tentatively reached an agreement on the interest with Arthur J. Gallagher & Co. and is now in a position to accept the Voluntary Settlement Agreements.
The City Manager and the City Attorney agree that the City should accept the Voluntary Settlement Agreements associated with the settlement fund established in Illinois. This settlement includes all claims that the City may have against Arthur J. Gallagh...
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