ACE’s “Plea Agreement” with Law Enforcement and Regulators

Law enforcement, insurance regulators, and insurance-industry participants continue to collide regarding “contingent commissions” and bid rigging that occurred in US insurance markets in the 1990s and ’00s. One insurer, Liberty Mutual, says it would rather fight than switch, and it has announced it will defend litigation brought by state attorneys general and insurance regulators. Most other insurers have sought to put the matter behind them.
For example, ACE Ltd. recently reached accord with the New York Attorney General’s office and New York’s insurance commissioner regarding its conduct principally regarding the broker Marsh and ACE’s effort to expand its excess general-liability insurance business. (Illinois and Connecticut signed on, too). In a document whose title is rich in irony — an “Assurance of Discontinuance and Voluntary Compliance” — ACE undertakes to set up a compensation fund and to conform its future business practices. Review of the “Assurance of Discontinuance” provides rich, indeed stunning, detail into how business was done at the expense of corporate policyholders in particular whose premiums were sufficiently large as to make bid-rigging, kickbacks, lying, and cheating lucrative for the participants — both the individuals whose bonuses and power reflected their success in business and the companies that employed them that generated large premiums from the widespread conspiracy and corruption endemic to the top-tier of the insurance brokerage industry and the insurers that paid them.

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What You See Is Not What You Get: Renewal Policies

One aspect of insurance practice that I like is the seemingly unlimited number of nooks and crannies in insurance law. But like a tree falling in the forest, the existence of one pro-policyholder rule or another in a given state has little impact on human behavior — or trial outcomes — unless that rule is called upon.  One such rule is the "renewal rule."

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