Connecticut Attorney General's Office
Attorney General Announces Liberty Mutual Will Pay State $2 Million For Alleged Bid-Rigging And Secret Kickback Scheme
December 30, 2010
Attorney General Richard Blumenthal today announced that Liberty Mutual Insurance Company will pay 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 Blumenthal filed in 2006.
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.
“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.
“This settlement -- along with others achieved by this office providing hundreds of millions of dollars in restitution -- sends a message: insurance kickbacks and bid rigging are intolerable and will be punished.”
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.
Blumenthal said the far-reaching scheme 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.
Blumenthal thanked those in his office who worked on the investigation -- Assistant Attorneys General W. Joseph Nielsen and Matthew Budzik, and Paralegal Holly MacDonald, under the direction of Assistant Attorney General Michael Cole, Chief of the Attorney General’s Antitrust Department.