Jefferson City, Mo. - Missouri insurance regulators today announced a $1.25 million settlement agreement with nine, AIG affiliated insurance companies after a market conduct examination into their handling of workers' compensation insurance. During the course of the examination, the department alleged AIG insurance companies failed to file rate plans for large deductible workers' compensation policies.

"The filing of workers' compensation rates provides rate transparency which is crucial for a competitive insurance marketplace, particularly for Missouri small businesses," said Department of Insurance Director John M. Huff. "Rate transparency allows all businesses - large and small - to see what rates are charged by competing insurers in the workers' compensation market."

Missouri State statute requires workers' compensation insurers to file rates with the department. Rate filings provide price transparency in the market.

The settlement alleges that the companies failed to make individual risk filings with the department for 2,158 large deductible workers' compensation insurance policies with Missouri premium or exposure. They also failed to use mandatory forms, used withdrawn forms, erred in calculating the administrative surcharge rate and in collecting the administrative surcharge, incorrectly calculated the employer's liability increased limits, incorrectly calculated the scheduled rating modification and failed to provide timely responses to some information requests. 

Under the settlement agreement, AIG has agreed to take remedial action bringing them into compliance with statutes and regulations of Missouri. AIG will pay $1,250,000 to the Missouri State School Fund.

AIG also agreed as part of the settlement to account for payments made by policyholders to third party administrators for premium or charges for insurance in premium development for premium tax purposes on a prospective basis.

The Missouri workers' compensation market is highly competitive with over 320 insurance carriers actively competing to insure Missouri businesses. 

In market conduct exams and investigations, the Department of Insurance 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 more than $36 million in payments from insurance companies. The money goes toward refunds for consumers, General Revenue and the Missouri State School Fund. To learn more about our market conduct section and how they help ensure a fair market place in Missouri watch DIFP Weekly.

Consumers who have complaints or general questions about insurance, can call the department's Insurance Consumer Hotline at 800-726-7390 or by visiting insurance.mo.gov.