Attorney General Richard Blumenthal…announced a $1.3 million settlement with The Hartford Financial Services Group, Inc., resolving claims that it participated in several anticompetitive schemes that illegally inflated insurance and reinsurance costs nationwide. h/t Insurance and Law
The Hartford and Guy Carpenter have a different spin on the story. Naturally.
A spokesman for The Hartford said in a statement by e-mail, “We are pleased to have come to an agreement with the attorney general’s office. The Hartford has been out of the property and casualty reinsurance business since 2003, and we agreed to this settlement to avoid ongoing expenses related to the case.
“We believe our participation in the reinsurance facilities was lawful. We settled to avoid the costs of litigating with the attorney general over a business that The Hartford exited years ago.”
In an e-mail response to the attorney general’s accusations a spokesperson for Guy Carpenter said, “Guy Carpenter shares the view expressed earlier today in a statement made by The Hartford that: participation in these reinsurance facilities was, and is, lawful.
“Guy Carpenter continues to believe that the Connecticut Attorney General’s complaint is unfounded. These facilities result in improved terms and pricing of reinsurance for small- and mid-sized clients.”
Back now to Attorney General Blumenthal’s release:
“The Hartford is making history by this first-in-the-nation settlement—and drawing back the cloak of secrecy of a series of illegal price-fixing conspiracies that inflated insurance costs by hundreds of millions of dollars nationwide at the expense of 170 insurance companies and their customers,” Mr. Blumenthal said.
The Hartford, a Conn.-based company, he explained is cooperating with his investigation of reinsurance broker, Guy Carpenter, which he called “the ringleader” in a series of schemes to “illegally inflate costs for insurance companies and consumers nationwide.”
The attorney general said the broker enlisted The Hartford (which offered reinsurance through Hart Re Co. from 1986 to 2001 and ceased offering reinsurance in 2003) and other reinsurers in a pay-to-play scheme where the broker funneled select business to certain carriers in return for “excessive fees and other benefits from these reinsurers.”
He accused the broker of increasing costs for insurers and other customers by as much as 40 percent over several decades.
“Bolstered by backroom deals, insurance industry inertia and an unregulated market, Guy Carpenter’s conspiracies continued undetected for almost 50 years,” Mr. Blumenthal said…
The Hartford settlement stems from Blumenthal’s ongoing litigation against Guy Carpenter & Company, LLC, one of the world’s largest reinsurance brokers. The litigation and investigation concerns unlawful practices like pay-to-play and price collusion in the reinsurance industry — which insures or indemnifies insurance companies for extraordinary losses.
“The Hartford is cooperating to pursue money back from conspirators who raised premiums by up to 40 percent for thousands of consumers in Connecticut and nationwide. The Hartford’s settlement advances our action against the ringleader, Guy Carpenter, that masterminded and orchestrated a shifty coterie of more than 20 coconspirator companies in illegal price fixing.”
In 2007, Blumenthal sued Guy Carpenter for orchestrating a series of alleged conspiracies with dozens of reinsurers that illegally inflated costs for insurance companies and consumers nationwide, in some cases by 10 to 40 percent, over the course of several decades. The Hartford participated, as a reinsurer, through its subdivision, Hart Re Company, in several of the conspiracies beginning in 1986 until 2001. It ceased offering reinsurance in 2003.
One thought on “$1.3 million reinsurance price fixing settlement announced”
To quote Mr CLS:
This from the Hartford’s press release saying they threw Attorney General Blumenthal a bone:
The problem with telling lies it is hard to keep them straight. If the Hartford exited the P&C business in 2003 then WTF are they doing buying Cat reinsurance to cover Hurricane exposure in the Northeast in 2004?
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