A majority of the 15 insurance company and broker Defendants in a long-running lawsuit accusing them of bid-rigging have reached a proposed settlement that will cost them about $36.7 million. The antitrust class action is one of numerous cases that grew out of investigations conducted by former New York Attorney General Eliot Spitzer more than six years ago into whether brokers had conspired with insurers to fabricate bids to make commercial buyers believe their accounts were shopped around for the best deal and whether they hid some of the contingent commissions and fees paid to brokers.
The settlement was agreed to with brokers Aon, Willis and HRH (now owned by Willis) and with insurers American International Group, CNA, Crum & Forster, The Hartford, Liberty Mutual, Travelers and XL. According to the settlement, AIG, Travelers, Liberty Mutual and XL will collectively pay $27 million into a fund for customers that purchased excess casualty insurance policies from them through the named brokers between 1998 and 2004.
Separately, CNA, Crum & Forster, The Hartford and brokers Aon and Willis/HRH will collectively pay a smaller sum, a total of $9.7 million, to purchasers of commercial insurance for the same years. The $37 million settlement must be approved by the court. The case in federal court in New Jersey is a consolidation of several class actions brought in 2004 by commercial insurance customers including Eagle Creek of California, OptiCare Health Systems, of Connecticut, QLM Associates of New Jersey and Accent on Eyes Corp. of New York against various brokers and insurers.
The suits alleged that the brokers and carriers engaged in unlawful practices in the placement of insurance and the collection of contingent commissions. Violations of federal antitrust and racketeering laws were alleged. The charges were dismissed by a court three years ago, but then were reopened in 2010. Insurance broker Marsh, an original Defendant, previously settled its role in the case.
Source: Insurance Journal
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