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For Immediate Release
March 20, 2006
Media Contact:
Kevin Enright 410-576-6357

CURRAN ANNOUNCES $151.7 MILLION SETTLEMENT IN INSURANCE BID-RIGGING CASE

Zurich American Insurance Co. to repay policyholders;
make $20 million
payment to States

Maryland Attorney General J. Joseph Curran, Jr. announced today that Maryland, along with a coalition of other state Attorneys General, has entered into a settlement with Zurich American Insurance Company relating to bid rigging and price fixing allegations.

Zurich allegedly paid undisclosed contingent commissions to insurance brokers and conspired with certain insurance brokers in a "pay-to-play" scheme to overcharge customers for commercial insurance policies. Zurich allegedly submitted fake bids in order to create the illusion of a competitive bidding process, when in fact the broker had pre-designated another insurer as the winner at an inflated price. Zurich was allegedly rewarded for submitting fake quotes by receiving protection from competition on other lucrative accounts. Zurich has denied any wrongdoing. "Schemes like this drive up the cost of doing business in Maryland," said Attorney General Curran. "This settlement will compensate Maryland policy holders injured by this illegal conduct."

The multistate coalition, which included Texas, Florida, Pennsylvania, Massachusetts, California, Hawaii, Oregon and West Virginia, completed an extensive investigation of Zurich's conduct, and determined the overall harm to Zurich's customers. Zurich has agreed to reimburse customers $151.7 million, make a $20 million payment to the investigating states, disclose future contingent commission payments, and implement conduct reforms that change the way the company does business.

Maryland customers will receive an estimated $2.8 million under the settlement. As an investigating state, Maryland will also receive additional funds. The direct victims of the bid-rigging scheme were companies, non-profit organizations, and governmental units that purchased commercial lines of insurance from Zurich. The settlement is subject to court approval.

The multistate group continues to review the conduct of other insurers and brokers involved in the price-fixing scheme. Zurich is cooperating with the coalition of attorneys general. The settlement will be enforced through a judgment in state court, as well as through a multidistrict federal action in New Jersey.



   

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