Florida shares in settlement on bid-rigging charges
Published: Tuesday, January 29, 2008 at 4:44 p.m.
Last Modified: Tuesday, January 29, 2008 at 4:44 p.m.
Florida was among nine states and the District of Columbia to share in a $12.5 million settlement to be paid by the American International Group Inc. to resolve charges that some of its subsidiaries engaged in price-fixing, state officials said Tuesday.
The Florida Attorney General's Office, Department of Financial Services and Office of Insurance Regulation will receive approximately $3 million of the settlement to reimburse affected policyholders. Part of the money will repay the state for investigative costs.
"Policyholders deserve to know exactly what they are paying for and that they are paying a fair price for it," Chief Financial Officer Alex Sink said. "It's wrong that governments and businesses paid inflated insurance rates because they were led to believe there was competition when there wasn't."
AIG and several of its subsidiaries allegedly conspired with Marsh & McLennan and other insurance brokers by submitting fake bids to create the illusion of a competitive bidding process in the excess casualty commercial insurance market.
Despite the appearance of a fair bidding process, the broker had already decided which insurer would receive a particular policyholder's business, investigators said. As part of the scheme, AIG paid the brokers "contingent commissions" which were not disclosed to policyholders and in return received other lucrative business.
Hawaii, Maryland, Massachusetts, Michigan, Oregon, Pennsylvania, Texas and West Virginia were the other states included in the settlement.
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