NU Online News Service, Oct. 22, 3:49 p.m. EDT
Connecticut Attorney General Richard Blumenthal announced that The Hartford Financial Services Group, Inc. has settled reinsurance price fixing allegations for $1.3 million.
In a statement today, the attorney general said the company resolved claims that it participated "in several anticompetitive schemes that illegally inflated insurance and reinsurance costs nationwide."
"The Hartford is making history by this first-in-the-nation settlement–and drawing back the cloak of secrecy of 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," Mr. Blumenthal said.
The Hartford, a Conn.-based company, he explained is cooperating with his investigation of reinsurance broker, Guy Carpenter, which he called "the ringleader" in a series of schemes to "illegally inflate costs for insurance companies and consumers nationwide."
The attorney general said the broker enlisted The Hartford (which offered reinsurance through Hart Re Co. from 1986 to 2001 and ceased offering reinsurance in 2003) and other reinsurers in a pay-to-play scheme where the broker funneled select business to certain carriers in return for "excessive fees and other benefits from these reinsurers."
He accused the broker of increasing costs for insurers and other customers by as much as 40 percent over several decades.
"Bolstered by backroom deals, insurance industry inertia and an unregulated market, Guy Carpenter's conspiracies continued undetected for almost 50 years," Mr. Blumenthal said.
The suit against Guy Carpenter, a subsidiary of Marsh & McLennan Companies that also owns scandal-scarred insurer broker Marsh, dates back over two years. In 2005, MMC settled a price-fixing suit brought by New York State for $850 million over the actions of Marsh.
A spokesman for The Hartford said in a statement by e-mail, "We are pleased to have come to an agreement with the attorney general's office. The Hartford has been out of the property and casualty reinsurance business since 2003, and we agreed to this settlement to avoid ongoing expenses related to the case.
"We believe our participation in the reinsurance facilities was lawful. We settled to avoid the costs of litigating with the attorney general over a business that The Hartford exited years ago."
In an e-mail response to the attorney general's accusations a spokesperson for Guy Carpenter said, "Guy Carpenter shares the view expressed earlier today in a statement made by The Hartford that: participation in these reinsurance facilities was, and is, lawful.
"Guy Carpenter continues to believe that the Connecticut Attorney General's complaint is unfounded. These facilities result in improved terms and pricing of reinsurance for small- and mid-sized clients."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.