Reply #17: Zurich American Insurance to pay $171M for bid-rigging and price-fixing

[UpInArms]

http://cbs13.com/business/local_story_078193209.html

(AP) DALLAS Zurich American Insurance Co. has agreed to pay $171 million in a deal with nine states to settle allegations of bid-rigging and price-fixing in the commercial insurance market, state officials said Sunday.

With the settlement, policyholders in the nine states will receive more than $150 million in refunds, the attorneys general in Texas and Massachusetts said Sunday.

The U.S. unit of Zurich Financial Services will pay at least $20 million in investigative costs to the states, Texas Attorney General Greg Abbott's office said in a statement.

The settlement is the latest in a broad investigation by state authorities into the practice of "contingent commissions" insurers paid brokers. Regulators say the commissions were part of a scheme between the companies and brokers to inflate premiums and overcharge commercial policyholders.

The states in the Zurich settlement are: California, Florida, Hawaii, Maryland, Massachusetts, Oregon, Pennsylvania, Texas and West Virginia.

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Marsh & McLennan Cos. Inc., the nation's largest insurance broker, agreed in January 2005 to pay $850 million in restitution to settle a New York state investigation into bid-rigging, price-fixing and the use of hidden incentive fees. Marsh publicly apologized for "shameful" and "unlawful" conduct.

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