ZFS staff plead guilty in US bid-rigging case
Two employees of Zurich Financial Services (ZFS) have pleaded guilty to criminal charges in connection with a price-fixing probe in the United States.
The Swiss insurance giant issued a statement confirming that the charges related to a violation of New York State anti-trust law.
A spokesman told swissinfo that the two employees had been dismissed by the company after being suspended last week.
He said several other employees had also been suspended pending the outcome of an internal investigation, but declined to give any further details.
The charges brought against the two underwriters form part of the ongoing investigation by New York attorney general Eliot Spitzer into the business relationships between insurance brokers and insurance companies.
The industry-wide probe concerns alleged fees paid by brokers to steer business to companies, regardless of whether this was in the best interests of the customer.
A spokesman for Spitzer said the two underwriters admitted to following and executing directions from a broker to submit bids that were designed to lose.
This resulted in the appearance of competition whereas in reality the business was actually being steered towards a predetermined “winner”.
Investigation
The latest development comes less than a week after ZFS suspended the two employees following a subpoena by Spitzer’s office.
ZFS is conducting an ongoing internal review of business practices relating to brokers, including its relationship with US market leader Marsh & McLennan, the subject of the initial bid-rigging charges filed by Spitzer’s office.
The two individuals were underwriters in ZFS’s excess casualty unit in the specialties business of North America Commercial.
The company said it was continuing its internal review and would continue to cooperate with the office of the New York attorney general and other authorities.
“At the end of the day, I think the financial impact for ZFS [of these charges] will be minor,” René Locher, an analyst with Kepler Equities in Zurich, told swissinfo.
“It is not just ZFS, it is the whole insurance industry in the US that is being investigated.”
swissinfo
Several insurance executives have been fired or suspended since Spitzer began investigating alleged conflicts of interest in the US insurance sector.
The investigation focused at first primarily on market leader Marsh & McLennan.
The charges coincide with ZFS’s announcement of a 35% increase in net profit for the first nine months of 2004.
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