Great American Insurance Company has reached a $176,000 settlement with Massachusetts Attorney General Martha Coakley on allegations of bid-rigging.
The settlement resolves allegations that Great American submitted a fake and intentionally uncompetitive insurance quote to Norwood, Mass.-based Analog Devices as part of a scheme to ensure American Insurance Group won the company’s 2004 insurance renewal, Coakley’s office said.
Martha Coakley
In a complaint filed in January 2008, Coakley’s office alleged that in 2004, at the request of insurance broker Marsh & McLennan Companies, Great American submitted a fake and intentionally uncompetitive quote to Analog Devices. Great American allegedly submitted the fake bid to make AIG‘s bid appear to be competitive.
Coakley’s office said in return for this favor, Marsh allegedly steered another one of Analog Devices’ insurance polices to Great American at a pre-determined price. Insurers such as Great American and AIG paid Marsh & McLennan lucrative contingent commissions based on the volume of business Marsh placed with them, the complaint said.
Diane Weidner, director of corporate communications for Great American, told IFAwebnews.com that the company is “pleased to have reached a resolution of the lawsuit brought by the Commonwealth of Massachusetts.”
“The case was entirely focused on an allegation that the company engaged in improper bidding on one account,” Weidner said. “The evidence showed that the allegations were unfounded. Great American was prepared to continue to defend the litigation on the merits, but deemed it best to put litigation expense behind it.”
The latest settlement comes four months after Coakley, on behalf of nine states, including Maryland and Pennsylvania, reached a $7 million settlement with Marsh to resolve a four-year investigation by the states into Marsh’s role in the nationwide bid-rigging scheme.
Under the terms of the settlement with Great American, the Cincinnati, Ohio-based insurer is required to pay $60,000 to Analog Devices and $116,000 to Massachusetts.
The agreement also requires Great American to undertake conduct reforms aimed at prevention insurance bid rigging in excess casualty insurance. Great American is specifically prohibited from colluding with brokers or other insurance companies to unlawfully fix insurance prices and is required to retain certain records concerning its business practices, the attorney general’s office said.
“Rigging insurance bids is a serious offense that unfairly inflates insurance costs for consumers,” Coakley said in a statement. “We believe this settlement will deter similar unfair behavior in the future.”
Mass. AG settles bid-rigging lawsuit against Great American Insurance Co. via IFAwebnews .
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