US insurers are in the spotlight after New York attorney general Elliot Spitzer sued Marsh & McLennan, the world's largest insurance broker.
The lawsuit's implications are likely to be felt across the industry
Mr Spitzer claims that since the late 1990s, Marsh got illegal payments for steering clients to firms such as Ace and American International Group (AIG).
On Wall Street on Friday, Marsh shares fell 14%, with AIG down 4%.
Marsh said it had been unaware of the charges until they were brought, and promised to co-operate.
"We are committed to getting all the facts, determining any incidence of improper behaviour, and dealing with appropriately with any wrongdoing," it said in a statement.
It added that it had suspended the deals with insurers - known as "placement services agreements" - which Mr Spitzer alleged were used as the vehicles for the payments.
"Today's decision was made in light of the serious allegations... that have been raised about this long-standing industry practice," Marsh said.
The other firms named in Mr Spitzer's investigation include Hartford Financial Services Group, Chubb Corp and an arm of Germany's Munich Re.
Hartford shares fell 3.7%, extending a decline of 6% the day before. Marsh shares had slumped 25% on Thursday, with AIG and Ace each down 10%.
Ace said it would continue to cooperate on the matter, while Hartford said that it does not condone illegal activities such as bid rigging.
Insurers fell across Europe as well, with the UK's Royal & Sun Alliance and Prudential both feeling the pain, along with Germany's Munich Re.
"At this early stage, forecasts of the ramifications for the industry are necessarily speculative," wrote analysts at Sandller O'Neil in New York on Friday.
"The magnitude and breadth of these events could be significant if bid-rigging is found to be widespread throughout the insurance industry."
Three of the firms under the spotlight have family connections.
AIG, the world's largest insurer by market value, is run by chairman and chief executive Maurice "Hank" Greenberg.
One son, Jeffrey, heads Marsh, while a second, Evan, is in charge of Bermuda-based Ace.
During a conference call with analysts, Hank Greenberg denied that AIG top executives had been involved with or knew about the activities being investigated.
The firm, he said, had started an internal inquiry led by an outside lawyer after receiving subpoenas earlier this year.
The inquiry had found problems in its American Home subsidiary, two of whose executives had pleaded guilty to related charges, he said, adding that AIG continued to co-operate.
On a mission
Mr Spitzer has earned a reputation as a crusading attorney general and a scourge of corporate wrong-doing.
He has made his name taking on some of Wall Street's biggest names, winning settlements more often than not, and forcing them to rethink the way they work.
In this case, Mr Spitzer alleges that unsuspecting clients were deliberately steered to firms in return for lucrative payoffs, a move which pushed up prices.
He also claims that a number of the firms were involved in bid rigging, whereby they fixed quotes, only giving the appearance of competition.
"This investigation is broad and deep and it is disappointing," Mr Spitzer said at a press conference.
It shows the "disregard for ethics and the law among some of our largest corporations", he added.
UK reinsurance firm the Benfield Group said its US subsidiary has been subpoenaed to assist with the investigation, although it stressed it was not subject to formal investigation.