Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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March 20, 2006

Attorney General Hardy Myers today announced that Oregon has entered into a $171.7 million settlement agreement with Zurich American Insurance Company of Schaumburg, Illinois related to bid rigging and price fixing allegations. Oregon, along with a coalition of nine other state Attorneys General, completed an extensive investigation of Zurich's alleged illegal conduct, resulting in an agreement that will be enforced through a judgment to be filed in Marion County Circuit Court, as well as through a multi-district federal action in New Jersey.

"The message we want to send to insurance companies operating in Oregon is very clear," Myers said. "Bid-rigging is a very serious offense and it will not be tolerated in our state. We will continue to monitor the insurance industry for companies that deceive their customers by inflating prices and distort the insurance marketplace."

Zurich allegedly paid undisclosed contingent commissions to insurance brokers and conspired with certain insurance brokers in a "pay-to-play" scheme to overcharge customers for commercial insurance policies. Zurich allegedly submitted fake bids in order to create the illusion of a competitive bidding process, when in fact the broker had pre-designated another insurer as the winner at an inflated price. Zurich was allegedly rewarded for submitting fake quotes by receiving protection from competition on other lucrative accounts.

During the multi-state coalition investigation, it was determined that the overall harm to Zurich's customers would be satisfied with a $151.7 million reimbursement to victims, along with a $20 million payment to be divided among the investigating states, of which Oregon is one. The company also must disclose future contingent commission payments, and implement conduct reforms that change the way the company does business.

The direct victims of the bid-rigging scheme were companies, non-profit organizations, and governmental units that purchased commercial lines of insurance from Zurich. The settlement is subject to court approval.

The multi-state group continues to review the conduct of other insurers and brokers involved in the price-fixing scheme. Joining Oregon are Attorneys General from California, Florida, Hawaii, Maryland, Massachusetts, Pennsylvania, Texas, West Virginia and Virginia. "Oregon will continue to work with this multi-state group to uncover others involved. Those responsible will be held accountable," Myers explained.

Consumers wanting information about Oregon consumer protection program may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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