The nation's largest insurance broker, Marsh & McLennan Cos., took kickbacks and colluded with leading insurance firms to rig bids, artificially jacking up the premiums companies pay for liability insurance, New York Attorney General Eliot L. Spitzer alleged Thursday.

The civil fraud complaint also names American International Group Inc., Hartford Financial Services Group Inc., ACE Ltd. and a division of Munich Re as active participants in the scheme but includes no charges against them. Two senior AIG executives pleaded guilty to criminal fraud, acknowledging that they schemed with Marsh and submitted uncompetitive bids to help the broker steer clients to other companies.

Thursday's actions are the first shots in what Spitzer called an investigation of widespread corruption in the insurance industry. While the complaint focuses on the sale of casualty insurance to businesses and government, Spitzer said his office has evidence that kickbacks and rigged bidding raised costs to buyers of auto, life and health insurance. "This investigation is broad, deep and disappointing for what it reveals," Spitzer said. More than a dozen companies are under investigation, and Spitzer promised that his office plans to bring more civil and criminal charges. "Trust me. This is day one," Spitzer said.

Spitzer usually files only civil charges against companies in such probes, reserving criminal charges for individuals, because criminal charges might lead to a corporate shutdown that would hurt workers and investors. New York-based Marsh & McLennan's stock price fell $11.28, or nearly 25 percent, to close at $34.85 Thursday on the New York Stock Exchange, and the prices of the three U.S. insurance companies named in the complaint fell between 6 and 11 percent each, helping drag down the broader market indexes. AIG, a component of the Dow Jones industrial average, accounted for almost half of its 107.88 point decline to 9894.45.

Several of the key executives in the implicated companies are closely related. AIG Chairman Maurice R. Greenberg is the father of Marsh & McLennan chief executive Jeffrey W. Greenberg, and another son, Evan G. Greenberg, is president and chief executive of ACE.

This investigation marks the third time in as many years that the New York regulator, who is expected to run for governor in 2006, has uncovered serious conflicts of interest in the financial services industry. Spitzer revealed in 2002 that stock analysts were pumping out biased research to win investment banking business for their firms. Last year, he blew the whistle on mutual fund firms for improperly letting favored customers engage in predatory short-term trading. In this latest probe, like the other two, Spitzer is using company documents and e-mails to allege that practices the industry takes for granted can lead to corruption that harms clients.

Companies and individuals hire insurance brokers -- and pay them commissions -- to solicit quotes and help find the best policies. It has become common practice in recent years for brokers to receive additional payments from insurance companies, based on the volume and quality of the policies they sell. But brokers are not supposed to let the insurance company payments interfere with their legal duty to find clients the best coverage at the best price.

"The gravity of the accusations takes the industry by surprise," said Robert Hartwig, chief economist for the Insurance Information Institute, a trade association. "Commissions and fees are commonplace in the industry and are well known to all parties."

Spitzer said Marsh collected $800 million last year in payments from insurance companies. That money not only affected its brokers' recommendations to clients but also led at least some employees to cross the line into illegal collusion, the complaint said.

"There is overwhelming evidence that brokers steered business based on the amount paid [by the insurance companies] not on what was good for the client," Spitzer said.

In one internal Marsh e-mail, a top executive wrote, "We need to place our business in 2004 with those that have superior financials, broad coverage and pay us the most."

In the case of Fortune Brands Inc., an Illinois-based consumer products company that used a Marsh broker in 2002, e-mails suggest the bidding process was entirely corrupt.

Both ACE and AIG participated, and an ACE executive described what happened in an e-mail cited in the complaint. ACE's "original quote [was] $990,000. We were more competitive than AIG in price and terms. MMGB [Marsh] requested we increase premium to $1.1 M to be less competitive so AIG does not loose [sic] the business."

Clarkson Hine, a Fortune Brands spokesman, said in a statement: "We're obviously concerned by what we learned today. We're already investigating the matter."

Spitzer had harsh words for Marsh. Noting that its mutual fund arm Putnam Investments was heavily implicated in the mutual fund scandal, he said, "The leadership of that company is not a leadership I will negotiate with. . . . We were misled by the very highest levels of that company."

Marsh officials said in a statement that they are cooperating with Spitzer's office. "We are committed to getting all the facts, determining any incidence of improper behavior and dealing appropriately with any wrongdoing."

Marsh is already the subject of a lawsuit by plaintiffs seeking class-action status. Filed in August, it alleges the firm fraudulently concealed the payments it received from brokers.

Unlike Wall Street, which is generally the province of the Securities and Exchange Commission, the insurance industry is primarily regulated by the states. New York State Insurance Superintendent Gregory V. Serio said his office and Spitzer's have been working in tandem for nearly six months on this investigation.

AIG said in a statement that the company is cooperating with Spitzer and had sought guidance from Serio's office as recently as last fall about paying commissions to brokers. The company said it was "saddened" by the news that Karen Radke, a senior vice president, and Jean-Baptist Tateossian, manager of national accounts, had pleaded guilty to felony fraud.

ACE and Hartford said in statement that they are cooperating with Spitzer, and Hartford added that the company "does not condone bid-rigging."

New York Attorney General Eliot L. Spitzer says more charges -- civil and criminal -- are coming.Spitzer describes the investigation as "disappointing for what it reveals."