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Insurance industry

Massachusetts Attorney General Reaches Settlement with Great American Insurance Co. Over Alleged Bid Rigging

Strategic Insights

— 2 min read

Massachusetts Attorney General Martha Coakley has reached a $176,000 settlement with Great American Insurance Co. regarding alleged bid rigging by the insurer. The settlement follows Coakley's office accusing Great American of knowingly participating in a scheme with broker Marsh & McLennan Cos. to submit fake and intentionally uncompetitive insurance quotes to semi-conductor manufacturer Analog Devices Inc. In return, MMC allegedly sent another of Norwood, Mass-based Analog Devices' insurance policies to Great American at a predetermined price. The settlement requires Great American to pay $60,000 to Analog Devices and $116,000 to Massachusetts, and also mandates reforms in the company's business practices.

Key Takeaways:

  • Massachusetts Attorney General Martha Coakley's office accused Great American Insurance Co. of bid rigging, alleging that the insurer knowingly participated in a scheme with broker Marsh & McLennan Cos. to submit fake and intentionally uncompetitive insurance quotes to Analog Devices Inc.
  • The settlement requires Great American to pay $176,000, with $60,000 going to Analog Devices and $116,000 going to Massachusetts.
  • The agreement also mandates reforms in Great American's business practices, including forbidding collusion with brokers or other insurance companies to fix insurance processes.
  • Coakley's office led the investigation, which involved nine states, including Florida, Hawaii, Maryland, Michigan, Oregon, Texas, West Virginia, and Pennsylvania.
  • Marsh & McLennan Cos. reached a $7 million settlement with the nine states in connection with the bid-rigging investigation.
  • Great American Insurance Co. has a Best's Financial Strength Rating of A (Excellent) as of May 18, 2009.
  • American Financial Group, Great American's parent company, saw its stock price rise 0.44% to $20.48 on May 18, 2009.

Statistics:

  • $176,000: The total amount of the settlement between Massachusetts Attorney General Martha Coakley's office and Great American Insurance Co.
  • $60,000: The amount of the settlement going to Analog Devices Inc.
  • $116,000: The amount of the settlement going to the state of Massachusetts.
  • 2004: The year in which the alleged bid-rigging scheme took place.
  • $7 million: The amount of the settlement reached between Marsh & McLennan Cos. and the nine states involved in the investigation.

Sources:

  • A.M. Best, "Massachusetts Attorney General, Great American Insurance Co. Settle Alleged Bid Rigging Matter" (May 18, 2009)
  • BestWire, "Marsh & McLennan Settles Bid-Rigging Charges for $7 Million" (Jan. 7, 2009)
  • BestWire, "Massachusetts Attorney General Sues Great American Insurance for Bid Rigging" (Jan. 7, 2008)
  • Comtex SmarTrend Alert, "UPTREND on 12-12-2008 for ADI @ $18.72"
  • Comtex SmarTrend Alert, "DOWNTREND on 10-10-2008 for AIG @ $2.04"
  • Comtex SmarTrend Alert, "DOWNTREND on 11-11-2008 for MMC @ $24.27"

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