D.C., Michigan last in Zurich settlement
NEW YORK - The attorneys general of the District of Columbia and Michigan were the last to put their names on a multi-state settlement with Zurich American Insurance Co.
The company, which admitted no wrongdoing, paid $92 million directly to 16 attorneys general for attorneys fees. The two settlements initially call for restitution payments of $210 million.
Zurich actually reached three separate yet entwined settlements. One settlement was with New York, Michigan and Illinois. That settlement stipulated that the company would pay $88 million in restitution to
consumers allegedly victimized by bid-rigging schemes.
Ohio entered into its own settlement, receiving $5 million in civil penalties and $2 million in investigative costs.
The multi-state settlement alleged the same as the other two, and Michigan and D.C. were added to it Dec. 4.
Zurich also agreed to pay at least $121.8 million in restitution to allegedly affected consumers in that settlement. According to Susan Levine, Zurich's public relations manager, there is a possibility that "Zurich will be required to distribute up to an additional $29.9 million but only if less than that amount is distributed under the Three-State Agreement."
Any restitution due Ohio consumers will be taken out of the monetary arrangements made in the other two settlements.
Then-New York Attorney General Elliot Spitzer scored the most for his office, receiving $39 million in fees from Zurich. Connecticut's Richard Blumenthal and Illinois' Lisa Madigan each took in $13 million.
Zurich paid another $20 million to the attorneys general in the other multi-state settlement. The amount will be put in an escrow account "that is to be distributed by and among the settling attorneys general and settling insurance regulators," Levine said.
West Virginia, California, Florida, Hawaii, Maryland, Massachusetts, Oregon, Pennsylvania, Texas and Virginia, Michigan and D.C. will be the recipients of that $20 million.
Zurich was linked with Marsh McLennan and Co., an insurance company broker investigated originally for bid-rigging by Spitzer that eventually agreed to an $850 million settlement. Marsh and McLennan admitted no wrongdoing in that case, too.
Metropolitan Life Insurance Co. has also recently reached a settlement with New York over the use of contingent commissions. St. Paul Travelers insurance company also settled Connecticut, Illinois and New York over contingent commissions.
Spitzer was well-known for leading the attack on insurance companies and settled with several others. He's now the governor of New York.
The Independent Insurance Agents and Brokers of America, Inc., says the terms to which Zurich was forced to sign will be detrimental to its business, according to the Insurance Journal.
The organization, known as "The Big 'I'" says in the report that it opposes the requirement that brokers and agents provide their customers with Zurich's mandatory disclosure form.
"The Big 'I'" was not a party to the negotiations and had no opportunity to raise its concerns about the mandatory disclosure form before the Zurich Settlement requiring it was executed," President Alex Soto said.
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