ABA Section of Antitrust Law Insurance Industry Committee The Antitrust Laws and Insurance: Recent Developments and Core Principles. New York's Insurance Investigation. Peter D. Bernstein Assistant Attorney General Antitrust Bureau New York State Office of the Attorney General.
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“Marsh Inc. would like to take this opportunity to apologize for the conduct that led to the actions filed by the New York State Attorney General and Superintendent of Insurance. The recent admissions by former employees of Marsh and other companies have made clear that certain Marsh employees unlawfully deceived their customers. Such conduct was shameful, at odds with Marsh’s stated policies and contrary to the values of Marsh’s tens of thousands of other employees.
In response, we have taken prompt, corrective action and implemented a series of business and corporate governance reforms. The employees of Marsh Inc. ask our clients and others to allow us the opportunity to regain their trust.”
“As these investigations have revealed, Aon and other insurance brokers and consultants entered into contingent commission agreements and other arrangements that created conflicts of interest. I deeply regret that we took advantage of those conflicts. This conduct violated the longstanding principle embodied in our Code of Conduct and Aon’s Values Statement that our clients must always come first. Such conduct was improper and I apologize for it. Aon believes that these investigations have done the industry a great service. Aon looks forward to working with regulators, insureds, insurance companies, and other stakeholders to put in place new business practices for the entire industry that eliminated the improper practices exposed by these investigations.”
“We believe that the regulatory investigations have been a catalyst for positive change in the industry. We strongly support the reforms that the Attorney General has advocated, and we previously had voluntarily implemented many as part of our Client Bill of Rights. We also were the first major broker in the industry to end the use of contingents, which we have abolished on a worldwide basis, and we believe that all insurance brokers and insurers should relinquish the use of contingent agreements.”
“AIG regrets and apologizes for the conduct that led to the action brought by the New York Attorney General and the New York Superintendent of Insurance and to today’s settlement. Providing incorrect information to the investing public and to regulators was wrong and against the values of our current leadership and employees. In response to these events, and to the guilty pleas of our own employees and others, as part of today’s settlement, we have and are continuing to aggressively implement business reforms to prevent this conduct from recurring. We are committed to business practices that provide transparency and fairness in insurance markets. As part of our commitment, among other things, we have agreed not to pay contingent commission for excess casualty insurance and will support legislation to eliminate contingent commission payments.”
“Zurich apologizes for the conduct that resulted in today’s settlements. Zurich recognizes that certain of its employees violated both acceptable business practices and Zurich’s own standards of conduct by engaging in improper bidding practices and the “finite reinsurance” transactions described in the Assurance of Discontinuance. Zurich is aggressively tightening its business practice controls to make certain that this type of conduct does not occur again. As part of Zurich’s larger effect to promote transparency and a “level playing field” in the insurance industry, Zurich has agreed to support legislation in the U.S. to eliminate contingent compensation paid to brokers and agents.”
“As part of today’s settlement with the Attorneys General and the Superintendent, ACE acknowledges that certain of its employees violated both acceptable business practices and ACE’s own standards of conduct by engaging in behavior that included improper bidding practices and certain ‘finite reinsurance’ transactions. ACE apologizes for this conduct. It has reformed its business practices and is satisfied that this behavior will not be repeated. In order to promote transparency and reduce the potential for conflicts of interest, ACE has supported legislation in the U.S. to eliminate contingent compensation and through this agreement pledges to continue to do so.”
The settlements with the brokers and insurance companies should have all brokers and insurance companies thinking about establishing/updating best practices and internal compliance programs.
Overall recoveries of over $2.6 billion for consumers and workers compensation plans and guilty pleas from numerous insurance company executives and officers.
McCarran-Ferguson changes are
possibly just around the corner.