ACE to Pay $9 Million in Pennsylvania to Settle Bid-Rigging Allegations

May 15, 2007

The parent company of ACE INA Holdings Inc., a Pennsylvania insurance company, will pay a record $9 million to settle allegations of bid-rigging and market collusion, according to Acting Pennsylvania Insurance Commissioner Randy Rohrbaugh.

The payment includes a $6 million penalty, with the remainder being used to provide restitution to consumers and reimburse the state for investigative costs.

“This settlement is the largest of its kind in our state,” Rohrbaugh said. “Our extensive investigation has focused on improper activity relating to ACE’s quoting and commission practices. Our main objectives are to identify and terminate illegal practices and to minimize the potential for future abuse through this industry-wide investigation.

“We believe that the strict controls ACE has put in place, which we will continue to monitor, will provide greater protection to consumers from illegal bid-rigging,” he added.

The department alleged that ACE participated in a scheme with various insurance brokers to falsify quotes to help them maximize their compensation by steering business to preferred insurers. The brokers would, in turn, steer certain business to ACE, creating a false appearance of market competition to the detriment of consumers.

The settlement document is available on the department’s Web site at Under the terms of the settlement agreement, ACE will:

Pay $9 million to the state, including a $6 million penalty and $3 million in costs and restitution that must be paid by July 10, 2007;

Provide unprecedented commission disclosure to commercial and individual consumers; and

Implement business reforms and cooperate in any related investigations.

ACE is required under the settlement to provide all consumers with access to detailed information about how their agent or broker is being compensated. The information will be available via a special Web site and through a toll-free telephone number.

“Commission disclosures are an important step in the continuing efforts of this department to create greater financial transparency for consumers in insurance transactions,” Rohrbaugh said.

ACE is a Pennsylvania-domestic U.S. insurer with a Bermuda-based parent company. The insurer provides property & casualty, accident & health, financial products and risk management services to corporate and consumer clients.

The department has previously settled related allegations against broker Marsh Inc., as well as Zurich Insurance Co.

Source: Acting Pennsylvania Insurance Commissioner

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