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Zurich American to pay policyholders $122M

The insurance company reaches a settlement to resolve claims of bid-rigging and price-fixing.

By ASSOCIATED PRESS
Published December 5, 2006

HARRISBURG, Pa. - Zurich American Insurance Co. will pay $122-million to resolve claims of bid-rigging and price-fixing in the commercial insurance market under a nationwide settlement negotiated by Florida and 10 other states, Pennsylvania Attorney General Tom Corbett said Monday.

The amount to be paid to policyholders in all 50 states reflects the final terms of a settlement that was filed Monday in state courts, said Nils Frederiksen, a spokesman for Corbett.

The states discovered that Zurich American failed to disclose it paid "contingent commissions" to insurance brokers and conspired with brokers in a scheme to overcharge commercial policyholders, Corbett said.

Zurich American also will pay an additional $20-million to the investigating states for costs and fees.

Preliminary settlement terms announced in March called for policyholders nationwide to receive $152-million in refunds, but the company was permitted to credit $30-million toward that amount in other nationwide settlements it is paying under a separate agreement with New York, Connecticut and Illinois, Zurich in North America spokesman Keith Owens said.

The company is not admitting any wrongdoing, Owens said.

The multistate coalition in the settlement includes California, Florida, Hawaii, Maryland, Massachusetts, Michigan, Oregon, Pennsylvania, Texas, Virginia and West Virginia.

Written notices will be mailed to all affected policyholders by Dec. 12. They will have until Jan. 11 to file a claim, opt out or object, Corbett said.

Zurich American is a unit of Swiss insurance giant Zurich Financial Services.

[Last modified December 4, 2006, 23:26:39]