Chicago-based insurance broker Aon Corporation has agreed to pay $190 million and adopt certain reforms, including bringing an end to the practice of contingency fees, in order to settle an investigation led by New York Attorney General Eliot Spitzer.

Mr Spitzer’s office announced details of the settlement which will see Aon provide $190 million over a 30-month period for restitution to policyholders. In addition, Aon’s chairman and CEO, Patrick Ryan, has issued a public statement apologizing for Aon’s improper conduct.

The underlying complaint in this case shows that improper conduct was pervasive at Aon, Attorney General Spitzer said. To its credit, however, the company has acknowledged the problems, has agreed to compensate policyholders and has adopted reforms that will provide greater accountability in the future.

The deal with Aon is believed to follow the structure of the $850 million agreement reached with Marsh & McLennan, the US insurance broker originally at the center of Spitzer’s probe into the industry. Spitzer filed suit against Marsh in October last year, alleging the use of corrupt business practices such as bid-rigging, price-fixing and the use of hidden incentive fees.

While reporting fourth-quarter earnings earlier this year, Aon said that it would set aside at least $50 million to settle the investigations by New York, Illinois and Connecticut attorneys general. Aon, nevertheless, denied the use of bid-rigging or fraud.