HARRISBURG – Attorney General Tom Corbett announced that Illinois-based Zurich American Insurance Co., one of the world’s largest insurers, will pay $121.8 million to resolve claims of widespread bid-rigging, price-fixing and customer allocation schemes in the commercial insurance market. The agreement is part of a national antitrust settlement negotiated by Pennsylvania and ten other states.
Corbett said that Zurich and several other large international insurers were accused of conspiring together in order to increase premiums for insurers and commissions for brokers. The states’ investigations revealed that Zurich failed to disclose that it paid secret “contingent commissions” to insurance brokers and conspired with brokers to overcharge commercial policyholders for their insurance policies.
Corbett said the victims of this bid-rigging scheme were large and small companies, nonprofit organizations and government offices that purchased commercial lines of insurance from Zurich.
In Pennsylvania there are nearly 173,000 Zurich policyholders that will be entitled to a portion of the $121.8 million settlement.
Corbett said that by Dec. 12, written notices will be mailed to all affected policy holders, who will have until Jan. 11 to file a claim, opt out or object.
“We encourage policyholders to be on the lookout for these notices and to file their claims promptly so that they can be properly compensated,” Corbett said. “Policyholders can also find helpful information regarding the settlement on Zurich’s Web site.”
In addition to Zurich’s Web site, policyholders can find information on the settlement, claim forms and court documents here.
As part of the settlement Zurich agrees to:
— Pay $121.8 million in refunds to commercial policyholders in the U.S.
— Fully disclose all compensation paid to commercial brokers and agents.
— Stop engaging in any of the practices that resulted in violations for 10 years.
— Pay $20 million to the investigating states for costs and fees.
The Commonwealth’s case was negotiated by Chief Deputy Attorney General James A. Donahue III of the Attorney General’s Antitrust Section in Harrisburg.
