BOSTON (Legal Newsline) - An insurance brokerage firm that allegedly accepted undisclosed commission payments from insurance companies has agreed to a settlement to provide refunds to consumers, Massachusetts Attorney General Martha Coakley has announced.

Coakley's office recovered nearly $90,000 from Beecher Carlson for customers, resolving allegations that the company accepted the undisclosed commission payments from insurance companies after already negotiating fee-based compensation agreements with its clients.

"It is deceptive for insurance agents or brokers to enter into fee agreements with customers and also take undisclosed commission payments from insurance companies," Coakley said.

"Such practices unfairly inflate insurance costs for businesses and consumers and will not be tolerated in Massachusetts. However, we remain pleased that Beecher Carlson cooperated from the outset with our review and agreed to make restitution payments to affected customers."

Under terms of the Beecher Carlson settlement, Beecher Carlson will refund $90,000 to seven customers, including three Massachusetts-based companies, and pay $25,000 to the state. Beecher also agreed to reform its fee and commission practices, providing written disclosure of all compensation to its fee based customers.

The review of Beecher Carlson by Coakley's office began after several former William Gallagher Associates employees joined Beecher. Those new employees had previously been involved in the fee transactions that were part of Coakley's Dec. 2007 lawsuit against William Gallagher Associates Insurance Brokers Inc.

In the William Gallagher Associates lawsuit, the company was alleged to have charged undisclosed fees to its customers by misrepresenting the fees as insurance premiums.

This allegedly allowed the company to take both fees and commissions on certain insurance placements. The lawsuit, resolved in 2007 by a consent judgment, required more than $3.3 million to be returned to customers, a more than $1 million payment to Massachusetts and transparent compensation practices going forward.

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