March 20, 2006 by Canadian Underwriter
Zurich American Insurance Company and its subsidiaries (ZAIC) have reached settlements totaling US$171.1 million with nine U.S. state attorneys general and one insurance commissioner, Zurich Financial Services Group (Zurich) has announced.
The settlements relate to U.S. industry-wide investigations into broker compensation and insurance placement practices, and they require the implementation of new disclosure and compliance regimes.
“ZAIC does not admit to any violation of U.S. federal or state laws as part of the settlements,” the company announced in a press release.
Specifically, the settlements include the following elements:
ZAIC has reached a settlement with a group of attorneys general from nine states (the “Multi-State Agreement”), building on a previously disclosed memorandum of understanding (MOU) that ZAIC entered into with plaintiffs in a nation-wide class action against commercial insurers and brokers pending in the United States District Court of the District of New Jersey.
The Multi-State Agreement increases the US$100-million settlement fund amount set forth in the MOU to a total of US$151.7 million, and requires ZAIC to pay US$20 million for state fees and costs.
The National Association of Insurance Commissioners’ Broker Activities Task Force assisted in developing a regulatory settlement agreement with ZAIC that the insurance commissioner from Florida has now executed. The NAIC task force is supporting this settlement as a sound regulatory framework, and is urging all state insurance regulators to consider joining it.
“Some of these settlements are dependent on court approvals, as well as various other conditions,” Zurich announced. “Zurich is also engaged in negotiations with other state legal and regulatory authorities, and hopes to bring these to a successful resolution.”
“We are pleased today’s announcement brings a greater sense of clarity and transparency to the quoting process for our customers in the United States, and we look forward to working collaboratively with our producers and business partners in this new environment,” Zurich CEO James J. Schiro said in a release.
“We will not tolerate any compromise of our ethical standards,” he added. “In addition, beyond remaining committed to working constructively with regulatory authorities when improper behavior is identified, we have significantly enhanced our compliance function over the past two years, and continue to institutionalize global best practices.”