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The insurer pays $12.5 million to put the matter behind it once and for all.
Stephen Taub, CFO.com | US
January 29, 2008
American International Group has agreed to pay $12.5 million to settle with nine states and the District of Columbia in their investigations into questionable payments by insurance companies to brokers.
The investigations have focused on contingent commissions paid to brokers based on bringing business to insurers. While such payments are not illegal, state attorneys general have targeted them because they create a conflict of interest for brokers, who are supposed to be working for their own clients. Other insurance companies also have settled with the states.
AIG separately agreed to pay $500,000 to settle anticompetitive-conduct allegations made by the Texas attorney general.
It's the latest financial hit for AIG, which in 2005 paid $1.6 billion to settle charges of bid-rigging and improper accounting brought by Eliot Spitzer, then the attorney general of New York and now the state's governor.
The new settlements were reached with the attorneys general of Florida, Hawaii, Maryland, Michigan, Oregon, Texas and West Virginia, the Commonwealths of Massachusetts and Pennsylvania, the District of Columbia, the Florida Department of Financial Services, and the Florida Office of Insurance Regulation.
AIG agreed to continue cooperating with the investigations, though in making the settlement it did not admit any liability.