Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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October 25, 2007


ACE and its Insurance Subsidiaries Settle State Antitrust Claims

Oregon Attorney General Hardy Myers today filed a settlement agreement with another large insurance carrier over charges of improper, fictitious quoting and steering of insurance businesses. Named in a Stipulated General Judgment filed in Marion County Circuit Court are ACE Group Holdings, Inc. and its subsidiaries. The companies agreed to pay $4.5 million to a group of eight Attorneys General in settlement of their antitrust claims. The agreement admits no violations of law.

Oregon, as a member of the multi-state task force, will receive $189,475 as part of the settlement. The agreement also mandates comprehensive injunctive relief including the disclosure of compensation ACE pays to insurance brokers. In addition to Oregon, the task force is comprised of Attorneys General from Texas, Florida, Massachusetts, Hawaii, Michigan, West Virginia, and the District of Columbia.

The multi-state investigation revealed that the company participated in fictitious quoting and steering of business and other schemes in the commercial insurance market, orchestrated by Marsh & McLennan of New York. In the process, large and small companies, nonprofit organizations, and public entities that purchased commercial lines of insurance from ACE were often misled into believing they were receiving the most competitive commercial premiums available.

"This is the second settlement that Oregon has entered into with an insurance carrier involving charges of bid-rigging," Myers explained. "We will continue to monitor other carriers for this anti-competitive way of operating in the marketplace and will take appropriate actions against them in Oregon's courts."

The scheme devised by broker Marsh & McLennan gave commercial policyholders the illusion of a legitimate competitive bidding process on policies. In fact, Marsh had secretly pre-designated certain insurers to win bids, but the results for the policyholders were actually inflated rates, not competitive bids. The scheme was successful because insurers such as ACE earned its preferred status by paying "contingency commissions" to insurance brokers but failed to disclose those payments to policyholders.

Prior to the settlement, ACE paid out compensation for overcharges to a nationwide group of policyholders and adopted significant business reforms that govern its bidding and underwriting practices.

ACE will be required to abide by those reforms and, in addition, disclose the actual amount of payments made to insurance brokers upon request from its customers and prospective policyholders. ACE has cooperated with the multi-state task force and agreed to provide assistance to the states as they continue their investigation.


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