Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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OREGON ATTORNEY GENERAL SETTLES INSURANCE BID-RIGGING CHARGES WITH THE TRAVELERS COMPANIES, INC.

December 28, 2007

Oregon Attorney General Settles Insurance Bid-Rigging Charges With The Travelers Companies, Inc.

Attorney General Hardy Myers today filed a Stipulated General Judgment in Multnomah County Circuit Court with The Travelers Companies, Inc. (Travelers) of Minnesota resolving charges of bid-rigging in its commercial lines of insurance. Today's agreement is the third multi-state action for Oregon that involves conduct known as "pay to play," a scheme devised by insurance broker Marsh & McLennan. Oregon is joined by eight other states, the District of Columbia, and the Florida Office of Insurance Regulation in this settlement.

The multi-state investigation revealed that Travelers participated in deceptive bid-rigging, price-fixing and other schemes in the commercial insurance market orchestrated by Marsh & McLennan. The schemes involved large and small companies, nonprofit organizations, and public entities that purchased commercial lines of insurance from Travelers and that were misled into believing they received the most competitive commercial premiums available.

"This illusory scheme led commercial policyholders to believe that the bidding process on policies was competitive," Myers said. "We found, in fact, that Marsh & McLennan had secretly pre-designated certain insurers to win bids, resulting in inflated rates for policyholders that were anything but competitive." The scheme was successful because insurers such as Travelers earned preferred status by paying "contingency commissions" to insurance brokers without disclosing those payments to policyholders.

During the investigation, Travelers paid out compensation for overcharges to a nationwide group of policyholders and adopted significant business reforms that govern its bidding and underwriting practices. Today's agreement requires Travelers to abide by those reforms and, in addition, to disclose the actual amount of payments made to insurance brokers upon request from its customers and prospective policyholders. Travelers will pay the multi-state group $6 million, of which $217,500 is designated to the Oregon Department of Justice (DOJ) Consumer Protection and Education Fund.

Oregonians interested in this case and consumer protection in general 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. DOJ is online at www.doj.state.or.us.

Contact:

Stephanie Soden, (503) 378-6002
Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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