Liberty Mutual Insurance Company has agreed to pay the state of Connecticut $2 million to settle allegations it conspired with brokers to rig insurance bids and that it paid insurance brokers secret kickbacks for preferential treatment.
The agreement settles a lawsuit that Attorney General Richard Blumenthal filed in 2006.
“Liberty Mutual’s conduct was reprehensible, illegally increasing insurance premiums for consumers and businesses and undermining the free market,” Blumenthal said. “The company brazenly broke the law, using underhanded, unethical and illegal methods to rip off its customers.
Blumenthal says the settlement "sends a message: insurance kickbacks and bid rigging are intolerable and will be punished.”
Undisclosed kickbacks
Blumenthal’s lawsuit charged that Liberty Mutual paid so-called “contingent commissions” -- undisclosed kickbacks -- to insurance brokers like Marsh, Aon, Willis Group Holding Ltd. and Arthur J. Gallagher & Co. In exchange, brokers steered insurance contracts to Liberty Mutual.
The far-reaching scheme, Blumenthal charged, raised insurance premiums not only for Liberty Mutual’s customers, but also for all consumers because the illegal practices artificially inflated prices market-wide.
The $2 million will go into the state’s General Fund.
Liberty Mutual -- based in Boston -- is one of the nation’s largest property and casualty insurers, providing services to the state as well as individuals and business in Connecticut.
Multiple lawsuits
Since 2005, Blumenthal has recovered hundreds of millions of dollars in restitution for consumers and businesses in similar cases involving Marsh, Inc. ,Aon Corp. and others in the insurance industry. To date, those cases have produced more than $35 million in civil penalties to the state.
The lawsuit against Liberty Mutual is the last pending legal action resulting from Blumenthal’s investigations into the insurance industry.
