Posted on 23 Oct 2009
The Hartford Financial Services Group will pay a $1.3 million settlement for its role in a complex, long-running alleged conspiracy that inflated insurance and reinsurance premiums by as much as 40 percent nationwide, Attorney General Richard Blumenthal said Thursday.
The Hartford, which no longer sells reinsurance, has been cooperating with Blumenthal's broader investigation, advancing the attorney general's 2007 suit against Guy Carpenter & Co., a New York-based division of Marsh & McLennan that he describes as "the ringleader" of the decadeslong conspiracy.
The Hartford's cooperation is helping expose "a series of illegal price-fixing conspiracies that inflated insurance costs by hundreds of millions of dollars nationwide at the expense of 170 insurance companies and their customers," Blumenthal said in announcing the settlement, to be paid into the state's general fund.
Reinsurance is basically insurance for insurance companies, often to cover huge claims.
Blumenthal said that The Hartford participated in "several of the conspiracies" from 1986 to 2001 through a former unit called Hart Re Co. The Hartford was one of "countless other co-conspirators" that paid Guy Carpenter "excessive fees and other benefits" in exchange for business it allegedly steered to them, he said.
"The Hartford helped Guy Carpenter create an illusion of competition," he said.
The Hartford maintained that its "participation in the reinsurance facilities was lawful" but said in a statement that it was "pleased" to reach a deal.
"We settled to avoid the costs of litigating with the attorney general over a business that The Hartford exited years ago," said the statement.
In its own statement, Guy Carpenter said it "shares the view expressed ... by The Hartford: participation in these reinsurance facilities was, and is, lawful."
The statement called Blumenthal's lawsuit "unfounded" and said its activities had resulted in "improved terms and pricing of reinsurance for small- and mid-sized clients."
In his 2007 suit against Guy Carpenter, filed at Superior Court in Hartford, Blumenthal alleged that the company conspired over decades with more than 20 other reinsurers to fix prices, set terms and shut out competition, inflating costs for insurance companies and consumers nationwide. Blumenthal said that The Hartford's cooperation had led to additional allegations against Guy Carpenter.