INSURANCE BID-RIGGING SETTLEMENT FINALIZED IN STATE COURT
Zurich American Insurance Co. implements business reforms; Oregon Department of Justice to receive $658,000; Insurer also to pay $121.8 million in class action lawsuit in federal court
Attorney General Hardy Myers today filed a stipulated general judgment in Marion County Circuit Court with one of the world's largest insurers, Zurich American Insurance Co., requiring the company to implement a variety of business reforms as part of a multi-state antitrust settlement reached in March with 10 other states.
The settlement resolves the states' allegations against Zurich and its U.S. subsidiaries concerning participation in widespread bid-rigging, price-fixing and customer allocation schemes in the commercial insurance market orchestrated by Marsh & McLennan and other large commercial insurance brokers. These companies, including several of other large international insurers, allegedly conspired together in order to increase premiums for insurers and commissions for brokers.
Today's state court filing contains comprehensive injunctive provisions that will prevent the recurrence in the future of these marketplace abuses. Zurich is prohibited from engaging in any of the practices that resulted in the violations at issue for a period of 10 years subject to court supervision and enforcement by the Oregon Department of Justice and Attorneys General from California, Florida, Hawaii, Maryland, Massachusetts, Michigan, Pennsylvania, Texas, Virginia, West Virginia as well as the Florida insurance regulatory agencies. Zurich also will pay the 10 investigating states $20 million for past and future attorney fees, payments in lieu of civil fines and reimbursement of investigative costs. Oregon will receive more than $658,000 for its Consumer Protection and Education Fund.
In a companion settlement of a class action lawsuit in federal court in New Jersey, Zurich will be required to distribute at least $121.8 million in refunds to commercial policyholders. The New Jersey court preliminarily approved this monetary payout in November.
The states' investigation revealed that Zurich failed to disclose it paid secret "contingent commissions" to insurance brokers, and conspired with brokers at the center of the conspiracy in a "pay-to-play" scheme to overcharge commercial policyholders for their insurance policies. The agreement entered today eliminates all that. All such compensation paid to commercial brokers and agents must be disclosed to the customer on a secure website or by toll-free telephone number. The compensation disclosure includes both standard insurance commissions paid by policyholders and any form of commission paid by Zurich to the broker for placing that customer's business. Policyholders may find that information helpful in making a decision to place or renew the insurance coverage with Zurich.
The direct victims of the bid-rigging scheme were large and small companies, non-profit organizations and government offices that purchased commercial lines of insurance from Zurich.
More information on the companion settlement of a federal class action lawsuit is available to commercial policyholders online at insurancebrokerageantitrustlitigation. com. Consumers wanting information about consumer protection in Oregon 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. The Oregon Department of Justice is online at www.doj.state.or.us.
Jan Margosian, (503) 947-4333 (media line only) email@example.com