ACE Insurance Pays $4.5 Million to Settle Multi-state Bid-rigging Claims
ACE Group Holdings has agreed to pay $4.5 million to end a bid-rigging and price-fixing case, according to state officials. The monies will be divided among eight states and the District of Columbia.
Florida’s Chief Financial Officer Alex Sink said ACE Group Holdings Inc. and its subsidiaries are paying the multi-state task force to resolve allegations of bid-rigging and price-fixing in the commercial insurance market in their dealings with insurance broker Marsh & McLennan.
In addition to Florida, the states of Hawaii, Maryland, Massachusetts, Michigan, Oregon Texas and West Virginia and the District of Columbia participated in the investigation and settlement.
Florida’s Sink said the multi-state investigation revealed that ACE 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 misled into believing they were receiving the most competitive commercial premiums available, according to the CFO.
Prior to the settlement, ACE provided reimbursement to a nationwide group of policyholders and adopted business reforms that govern its bidding and underwriting practices.
Under the consent decree and final judgment, ACE will be required to abide by those reforms and, upon the request of its customers, disclose the actual amount of payments made to insurance brokers.
ACE said it has cooperated with the multi-state task force and will provide assistance to the states as they continue their investigation of insurance brokers and other insurers.
According to Sink, this settlement marks the second agreement Florida has reached with insurance carriers involved with Marsh & McLennan and other insurance brokers using “pay-to-play” tactics.
It is also Oregon’s second such settlement. “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,” Attorney General Hardy Myers said.
D.C.’s Attorney General Linda Singer said, “Insurance customers deserve to receive honest, competitive bids from insurance companies, not sham bids cooked up by insurance brokers and their insurance company buddies,”
Florida Insurance Commissioner Kevin McCarty added that the settlement is another step toward establishing a national standard for transparency in insurance transactions.
The breakdown of individual state settlements is as follows:
D.C.: $103,703.71
Florida: $1,574,315.24
Hawaii: $74,939.23
Maryland: $251,630.51
Massachusetts: $680,951.76
Michigan: $251,958.21
Oregon: $189,475.04
Texas: $1,334,928.03
West Virginia: $38,098.27
ACE did not respond to requests for comment.
Sources: Florida Department of Financial Services
Office of the Attorney General of Florida
Office of the Attorney General of Oregon
Office of the Attorney General of Washington D.C.