Zurich Financial Services says its United States arm is to pay nearly $172 million (SFr222 million) following an industry-wide probe into insurance dealings.This content was published on March 20, 2006 - 10:30
The deal with Zurich American Insurance Company (ZAIC) and its subsidiaries is to settle allegations of commercial insurance price-fixing and bid-rigging.
Zurich Financial Services, Switzerland's largest insurer, said on Monday that the deal was made between nine state attorneys general and one insurance commissioner.
It said the settlement requires the implementation of new compliant regimes, under which ZAIC brokers will be obliged to disclose the company's commission arrangements with customers.
However, ZAIC does not admit to any violation of US laws as part of the settlements, it added.
The payment includes $151.7 million in refunds for policyholders and an additional $20 million will be paid to the nine states: California, Florida, Hawaii, Maryland, Massachusetts, Oregon, Pennsylvania, Texas and West Virginia. This includes state fees and costs.
James Shiro, chief executive officer of Zurich Financial Services, said the company was pleased that Monday's announcement brought "a greater sense of clarity and transparency to the quoting process for our customers in the United States".
"We will not tolerate any compromise of our ethical standards."
Shiro added that the company remained committed to working with the regulatory authorities when improper behaviour was identified and it had significantly enhanced its compliance over the past two years. Global best practices had also been put into action.
Some of these settlements are dependent on court approvals and other conditions, Zurich said.
ZAIC is the first of 25 insurers and brokers to settle in a lawsuit in the Federal District Court in New Jersey.
It is part of a broad investigation by state authorities into the practice of "contingent commissions" paid by insurers to brokers.
Regulators say the commissions were part of a scheme between companies and brokers to inflate premiums and overcharge commercial policyholders.
In an unrelated development, Zurich Financial Services was also reported over the weekend to be in merger discussions with St. Paul Travelers Cos. However, this was denied by St. Paul and Zurich Financial refused to comment.
swissinfo with agencies
Zurich Financial Services has offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.
It was founded in 1872 and has its headquarters in Zurich, Switzerland. It employs approximately 55,000 people and has customers in more than 120 countries.
In February the company said net profit had risen by 30 per cent in 2005 to a record $3.2 billion (SFr4.2 billion) despite record hurricane claims.
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