Zurich OKs More Bid-Rigging Settlements

Zurich Financial Services on Monday agreed to pay $153 million to settle insurance bid-rigging charges by New York, Connecticut and Illinois, bringing to about $325 million the value of such settlements it has made with 12 states.

The agreements came less than two months after American International Group Inc. paid a record $1.64-billion regulatory settlement on many of the same charges. There were indications that further settlements were in the works.

“Our investigation is continuing,” Atty. Gen. Richard Blumenthal of Connecticut said. “We’re out to obliterate a culture of corruption.”

Zurich conspired with other insurers to fix prices in excess casualty coverage, which kicks in after regular property-casualty policies exceed a certain sum, New York Atty. Gen. Eliot Spitzer said.

Zurich agreed to stop paying “contingent commissions” to encourage brokers to steer business its way and would not pay them on excess casualty business in the United States through 2008, Switzerland’s largest insurer said in a statement.

Under the latest settlements, Zurich will pay $88 million to policyholders, $39 million to New York and $13 million each to Connecticut and Illinois.

Although Zurich issued an apology, it did not admit violating any state or federal laws.

“The insurance companies are lining up to settle,” said Donald Light, an insurance analyst with Celent. “They regard this as a cost of avoiding a worse fate: being indicted and put out of business.”

Marsh & McLennan Cos., the world’s largest insurance broker, was the “ringleader” in the bid-rigging, Light said. Last year Marsh agreed to pay $850 million to regulators.