Posted on 31 Oct 2011
Massachusetts-based insurance broker William Gallagher Associates will pay $1.7 million to resolve allegations by Connecticut's insurance commissioner and attorney general that it overcharged a client millions of dollars over several years by concealing fees and commissions.
The agreement follows a nearly $4 million settlement in 2007 William Gallagher and authorities in Massachusetts over similar allegations.
The broker allegedly overcharged Milford Power Co. more than $2 million, according to Connecticut Insurance Commissioner Thomas B. Leonardi and Attorney General George Jepsen. From 2002, it concealed certain fees and commissions, issued "dummy" invoices, changed original policies and kept two sets of books to hide the practice, according to the commissioner and attorney general.
William Gallagher Associates will pay the state $100,000 in civil penalties and pay $1.6 million to be deposited in the state's General Fund, Connecticut officials said.
Attempts to speak with William Gallagher Associates were unsuccessful. However, the firm didn't admit wrongdoing, Connecticut officials said.
"The company knew that it was violating Connecticut law while engaging in this conduct and took steps not only to hide it from its clients, but also from the state," Jepsen said in a statement. "Under this agreement, WGA will forfeit nearly all of the unlawfully obtained overcharges not already returned."
In December 2007, the broker agreed to the nearly $4 million consent judgment with Massachusetts Attorney General Martha Coakley's office to settle the allegations of billing customers for unauthorized and undisclosed compensation, and misleading customers about the brokerage firm’s contingent commission practices and involvement in reinsurance.