University President Henry Bienen said he hopes Patrick Ryan will continue to serve as the chairman of Northwestern’s Board of Trustees, even after evidence allegedly was found suggesting that Ryan’s company, Aon, may be engaging in deceptive and coercive practices.

New York Attorney General Eliot Spitzer is continuing his six-month investigation into allegations about the Chicago-based insurance brokerage firm that also operates out of New York. NU alumnus Patrick Ryan — who lent his name and money to Ryan Field — presides over Aon, the second largest insurance brokerage firm in the nation, next to Marsh & McLennan.

The New York Times reported on Oct. 31 that Spitzer’s office was close to filing civil fraud allegations, based on evidence that Aon directed customers to insurance companies that pay the brokerage firm large fees and engaged in “tying.” This unethical practice occurs when brokers agree to work with insurers on the condition that these companies buy their own insurance through that brokerage firm. Ryan’s company declined to comment on the charges.

Spitzer filed a claim Oct. 14 against Marsh & McLennan accusing the firm of demanding fees from insurance companies in exchange for sending more business their way. Aon is just one of the companies mentioned in the suit but has not formally been charged.

For the past several years, NU went through Aon for its accidental death and dismemberment plan from The Hartford Financial Services Group, Inc. — another firm mentioned in the suit — but that contract expires at the end of 2004. In January the university will switch to Reliance Standard Life Insurance because the firm offers lower premium costs, said Tom Evans, director of benefits, insurance and retirement for human resources at NU.

“The university has no special relationship to the company,” Bienen said. “We do business through Aon sometimes. We do business through lots of insurance companies.”

Brokerage firms provide their customers with a list of possible insurance plans offered through different companies. Many consider it standard practice for brokerage firms to receive financial compensation, or kickbacks, for bringing customers to them.

The practice of receiving compensation from insurers becomes criminal when the brokerage firm compromises the quality and price of insurance plans to obtain larger fees from carriers

“It’s not legal, but it’s not illegal. It’s the fuzzy area in between,” said Bryan Tolles, a Weinberg senior who has worked for Aon.

Many people in the business consider it standard practice for brokerage firms to receive financial compensation for sending customers to a certain insurance company.

Ryan attended NU on a football scholarship. After graduating in 1959, he built his Chicago insurance company into a large conglomerate through a series of mergers. Ryan also owns a large stake in the Chicago Bears football team and serves on the board of The Tribune Company.

“This is a person that has been a great civic leader and contributor to the city,” Bienen said. “I don’t know if anyone who knows Mr. Ryan thinks differently.”

Spitzer has not pegged Aon with other more serious charges, such as price-fixing or bid-rigging.

Illinois Attorney General Lisa Madigan has not found any misconduct within Aon.

No federal regulatory agency exists to monitor the insurance business.

Ryan announced at the end of September he will be stepping down as CEO of Aon but said the choice was not connected to the investigation.

Despite the allegations of wrongdoing, Bienen said he stands behind Ryan as a man of character.

“Mr. Ryan has been great to Northwestern,” Bienen said. “He’s someone who has been extraordinarily important as a supporter, as a friend, as an adviser.”

Reach Amy Hamblin at [email protected].