HARRISBURG – Attorney General Tom Corbett today announced that the Attorney General’s Office and the Pennsylvania Department of Insurance had reached a $9 million settlement with ACE, Limited.
The settlement comes as a result of ACE’s involvement with other insurers and brokers to rig bids for excess casualty insurance. As a result of a previous agreement, ACE agreed to pay back $40 million to policyholders for these illegal business practices, which occurred between 2000 and early 2004.
“ACE participated in a scheme with various insurance brokers to falsify quotes in order to easily steer business to preferred insurers, in exchange for the same thing in return,” Corbett said. “This shrewd business tactic created a false appearance of market competition and cheated consumers out of millions of dollars.”
In addition to the bid-rigging tactics, ACE also paid “contingent commissions,” which are payments that insurers pay to brokers and agents in addition to their base commissions. In exchange for the “contingent commissions,” brokers agreed to steer policies for excess casualty to ACE and increased premiums on existing policies.
Corbett said that the agreement requires ACE to reform its business practices. Ace will now disclose to any client, who asks how much it is paying in compensation to a broker or non-exclusive agent on that client’s insurance business.
“The bid-rigging that ACE engaged upon in this scheme essentially raised premium prices for insurance customers and steered business directly to themselves, which stifled competition without the policyholders knowledge,” Corbett said.
As part of the agreement ACE agrees to:
Pay $9 million to the Commonwealth.
-Fully disclose to present or prospective policyholders compensation information.
-Establish a toll-free telephone number that policyholders can request disclosure of compensation information.
-Not provide or offer any broker or non-exclusive agent a false, fictitious, inflated, artificial, alternative, back-up or throw away bid, quote or indication, or any other illegal quote.
-Pennsylvania government agencies which purchased ACE excess liability policies will receive payment out of the $9 million.