The settlements call for total payments of $12.5 million, to be allocated among the ten jurisdictions, an announcement said. AIG said it will continue to maintain certain producer compensation disclosure and ongoing compliance initiatives.
AIG denied the allegations and did not admit liability, but said it agreed to the settlements to avoid the expense and uncertainty of protracted litigation. AIG also said it will continue to cooperate with the industry-wide investigations.
The settlements, subject to court approvals, were reached with the Attorneys General of the States of Florida, Hawaii, Maryland, Michigan, Oregon, Texas, and West Virginia; the Commonwealths of Massachusetts and Pennsylvania; the District of Columbia; the Florida Department of Financial Services; and the Florida Office of Insurance Regulation. The agreement with the Texas Attorney General also settles allegations of anticompetitive conduct relating to AIG’s relationship with Allied World Assurance Company, and includes an additional settlement payment of $500,000, according to the announcement.
AIG is not the only insurance firm accused of paying contingent commissions to brokers who brought in more business.
In January 2007, Connecticut Attorney General Richard Blumenthal announced that The St. Paul Travelers Companies, Inc. said it would stop paying contingent commissions to insurance agents and brokers by the start of 2008 (See St. Paul to Convert to Fixed Commission Structure). The decision echoed one announced by Chubb Corporation in late 2006 (See Chubb to Discontinue Contingent Commissions).