Ohio Attorney General Richard Cordray announced the settlement linked to claims AIG conspired with Marsh & McLennan and other insurers to eliminate competition in the state’s commercial casualty insurance industry.
A suit filed in Cuyahoga County Common Pleas alleges that the insurers agreed to provide customers with fictitious quotes to create the false impression that competitive bidding had resulted in the best possible price during a period of 2001 to 2004.
Through the settlement agreement, AIG denied the allegations and did not admit liability.
“We have settled to avoid the expense and uncertainty of protracted litigation concerning events from 2004 and earlier,” AIG spokesman Mark Herr told IFAwebnews.com by email. “This will allow us to continue to focus on strengthening our businesses and repaying the American taxpayer.”
While AIG has settled the matter, Cordray’s office said the case will continue against Marsh, ACE American Insurance Co., The Chubb Corp. and Hartford Financial Services Group.
In a statement, Cordray said “the scam in play here” is yet another example of “the all-consuming corporate greed that has been so prevalent on Wall Street.
“This scheme caused premiums to go up and ultimately cost Ohio public schools, universities, pension funds and others millions of dollars,” he said in a statement. “While this is a good settlement for Ohio, we’re not done. We will continue to aggressively pursue our claims against the remaining defendants in this case.”
Settlement distribution
Cordray’s office said within the next month, more than $3 million of the settlement funds will be distributed to the 26 entities represented in the case. Exactly $4 million from the settlement will be put aside in a fund to be distributed by the court once the anti-trust case has been completely resolved.
Among the largest recipients of the settlement dollars are: The Ohio State University ($1.2 million); the Ohio Public Employees Retirement System ($383,834); the Columbus Regional Airport Authority ($209,444); and the City of Cincinnati ($207,661).
Each of the 26 public entities is to receive 10% of what was paid in commercial casualty insurance premiums brokered through Marsh over the three-year span of the alleged scheme. Additional funds will go to the state’s Antitrust Resolving Fund for enforcement ($805,000), the Ohio Attorney General’s Office for litigation costs ($850,000) and to the Ohio Department of Insurance for investigative costs ($100,000).
Cordray is also involved in a class-action securities fraud suit against AIG representing several Ohio public pension funds.
Regarding the pension fund dispute, Herr said AIG has already paid $800 million to an U.S. Securities and Exchange fund to compensate investors. That amount, he said, is “almost three times what all the other defendants in the action have agreed to pay combined.
“Any additional payments would come at the expense of the American taxpayer and would enrich the plaintiffs’ lawyers litigating these claims,” Herr added.