Chubb coughs up over US fees dispute
US-based insurance giant Chubb Corporation has agreed to pay $US239,000 ($369,162) to settle compensation disclosure allegations brought by the Massachusetts Attorney-General.
The allegations centre on a compensation deal between the global insurer and Boston insurance brokers William Gallagher Associates (WGA). The Attorney-General’s office sued WGA for fraud in December 2007, with the case ending in a settlement that cost the broker more than $US4.3 million ($6.6 million).
The Chubb settlement follows a $US3 million ($4.6 million) loan the state alleged the insurer made to WGA which the insurer offered to waive on the condition the broker directed business to Chubb.
It was also alleged Chubb invited WGA to invest in a Chubb-sponsored reinsurance company which gave the broker a financial interest in keeping policies with Chubb.
Attorney-General Martha Coakley alleged Chubb provided a trust fund to WGA to be used to subsidise the insurer against lower quotes from competing insurers, thereby distorting the competitive bidding process.
As part of the settlement Chubb will pay $US182,815 ($282,417) to certain WGA customers and $US56,196 ($86,813) to the state. Chubb has agreed to fully disclose future loans and comply with certain reinsurance restrictions. While saying it didn’t intend to deceive anyone, Chubb has also agreed to stop providing funding pools to state agents and brokers.
The allegations centre on a compensation deal between the global insurer and Boston insurance brokers William Gallagher Associates (WGA). The Attorney-General’s office sued WGA for fraud in December 2007, with the case ending in a settlement that cost the broker more than $US4.3 million ($6.6 million).
The Chubb settlement follows a $US3 million ($4.6 million) loan the state alleged the insurer made to WGA which the insurer offered to waive on the condition the broker directed business to Chubb.
It was also alleged Chubb invited WGA to invest in a Chubb-sponsored reinsurance company which gave the broker a financial interest in keeping policies with Chubb.
Attorney-General Martha Coakley alleged Chubb provided a trust fund to WGA to be used to subsidise the insurer against lower quotes from competing insurers, thereby distorting the competitive bidding process.
As part of the settlement Chubb will pay $US182,815 ($282,417) to certain WGA customers and $US56,196 ($86,813) to the state. Chubb has agreed to fully disclose future loans and comply with certain reinsurance restrictions. While saying it didn’t intend to deceive anyone, Chubb has also agreed to stop providing funding pools to state agents and brokers.