Conn. settles first-of -its-kind reinsurance antitrust case
HARTFORD, Conn. (Legal Newsline) - The Hartford Financial Services Group, Inc., has agreed to a $1.3 million settlement with Connecticut's attorney general over antitrust allegations.
The settlement resolves claims that The Hartford participated in several anti-competitive schemes that led to illegally inflated insurance and reinsurance costs nationwide.
The Hartford's payment, which will go to Connecticut's General Fund, is the first antitrust settlement of its kind in the reinsurance industry, Connecticut Attorney General Richard Blumenthal said.
"The Hartford is making history by this first-in-the-nation settlement - and drawing back the cloak of secrecy on 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.
The settlement stems from Blumenthal's ongoing litigation against Guy Carpenter & Company, LLC, one of the world's largest reinsurance brokers. Guy Carpenter was sued by Blumenthal in 2007 for allegedly orchestrating with dozens of reinsurers a series of conspiracies that created illegally inflated costs of between 10-40 percent for both insurance companies and consumers nationwide over the course of several decades.
"Guy Carpenter enlisted The Hartford and countless other co-conspirators to participate in pay-to-play schemes in which Guy Carpenter allegedly funneled lucrative business to select inner circles of reinsurers in exchange for excessive fees and other benefits from these reinsurers," Blumenthal said.
"Participating reinsurers agreed not to compete against the prices and terms set by Guy Carpenter in exchange for highly profitable business. Reinsurers unwilling to 'play ball,' as Guy Carpenter put it, were foreclosed access to potential business that they were otherwise willing to compete for and write."
Acting as a reinsurer, The Hartford participated from 1986-2001 in the scheme through its Hart Re Company subdivision. Reinsurance was no longer offered by the company after 2003.
"More than money, The Hartford has provided my office with critical cooperation and information necessary to stop a culture of collusion in the multi-billion dollar reinsurance industry," Blumenthal said.
"The Hartford has cooperated with my industry-wide reinsurance investigation -- particularly involving Guy Carpenter, one of the world's largest reinsurance brokers and the ring leader of pervasive price-fixing schemes for approximately 50 years.
"My office will continue to pursue Guy Carpenter in court, now armed with the cooperation and assistance of one of Guy Carpenter's former coconspirators, The Hartford, which has courageously chosen to step up and speak out against one of the most powerful reinsurance brokers in the world."