June 18, 2012
Financial giant AIG pays $1 million in fines after Missouri Department of Insurance investigation
Settlement addresses problems under former AIG management
Jefferson City, Mo. - Public schools in Missouri have received more than $1 million as a result of a settlement between the Missouri Department of Insurance and AIG, the national financial services company. In 2008, every state insurance department in the country began a joint investigation of AIG for violations of insurance laws.
The investigation, known as a market conduct exam, focused on allegations that AIG, under previous leadership, underreported its workers' compensation insurance revenues by more than $2 billion. Workers' compensation premiums are taxed at a higher rate than auto, liability and other types of insurance.
Under the nationwide settlement, AIG will pay a total of $146 million to the states, including just over $1 million to Missouri. States will continue to monitor AIG, and the company could face up to $150 million in additional fines if it fails to comply in the future.
"This underreporting of premium volume allowed AIG to pay less in taxes and gain a financial advantage over its competitors," said Missouri Department of Insurance Director John M. Huff. "Missouri employers count on competitive workers' comp insurance markets, and our laws provide consequences for companies that attempt to undermine competition."
In market conduct exams and investigations, the department reviews insurance company practices regarding the treatment of policyholders. This includes the way premium rates are charged, the way insurers handle claims and other responsibilities under state law. These reviews can result in refunds for consumers, fines and corrections in business practices, as well as other remedies.
Since the beginning of 2009, Market Conduct enforcement actions have generated $8.7 million in payments from insurance companies. The money goes toward refunds for consumers, general revenue and the Missouri State School Fund.
About the Missouri Department of Insurance, Financial Institutions & Professional Registration
The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.