New York Attorney General Eliot Spitzer on Friday charged Liberty Mutual Group, the sixth largest U.S. property casualty insurer, with rigging bids and making payoffs to steer business its way.

The civil complaint in New York State Supreme Court says Boston-based Liberty Mutual conspired with Marsh & McLennan Cos. Inc. (MMC), the world's largest insurance broker.

Last year, Marsh & McLennan paid $850 million to Spitzer's office and other regulators to settle these charges. The New York attorney general now wants Liberty to disgorge its "illegal" profits, reimburse damaged policyholders and pay treble damages.

Liberty Mutual spokesman John Cusolito could not be reached for comment.

The company ranks 102nd on the Fortune 500 list of the largest corporations, with more than $21 billion in annual revenue.

Spitzer claims that Liberty and Marsh conspired to rig the excess casualty market, where businesses go to get coverage beyond their normal insurance policies.

From 2001 until 2004, Spitzer said, Marsh repeatedly asked Liberty to provide higher, fake bids in order to allow some of Marsh's other clients, such as American Insurance Group Inc. (AIG) to win with a lower, arranged bid.

"Through this scheme, Marsh was able to deceive its clients into thinking that the insurance policies and premiums it offered were the result of true competition," Spitzer said. Meanwhile, consumers and businesses paid inflated premiums, he said.

In return, Liberty received favorable treatment from Marsh, Spitzer said. In February AIG paid $1.64 billion to settle its regulatory charges.

In August of last year, a former Liberty Mutual executive pleaded guilty to criminal charges in connection with the bid-rigging.

In addition to bid-rigging, Spitzer's lawsuit also raises the issue of "contingent commissions," which have and continue to be paid by insurers to some brokers based on how much business they bring to insurers.

While not technically illegal, the cost of this scheme is "borne by customers steered to more expensive and perhaps even inferior products," Spitzer's lawsuit says.