Florida Insurance Commissioner Announces $14 Million Settlement With AIG Insurance Company
TALLAHASSEE (9/26/2006) – Florida Insurance Commissioner Kevin McCarty today announced a multi-million dollar settlement with AIG Insurance Company (AIG) to settle charges that the company failed to justify rates or used excessive and unfairly discriminatory rates on coverage required by the federal Terrorism Risk Insurance Act.
Under the consent order AIG will be required to refund or credit approximately $13.6 million, in Workers' Compensation, and approximately $100,000.00 in non-Workers' Compensation lines, plus interest, to policyholders in the state. AIG will also be required to pay $300,000 to the Florida Office of Insurance Regulation (Office) for costs and fees related to the settlement.
"This is truly a victory for Florida's consumers and businesses," said Commissioner McCarty. "Regardless of whether it is a small carrier or an industry giant like AIG, we will remain vigilant to assure that Floridians are not charged improper insurance rates."
The excessive charges were for Workers' Compensation, Fire and Allied Lines, Commercial Property, Surety, Commercial Automobile and General Liability terrorism insurance coverage. The overwhelming bulk of the settlement came from the Workers' Compensation terrorism coverage.
The refunds and credits will accumulate from the date AIG started charging the rates filed with the Office (a period beginning January 2003 through March 2004) through the date in which a credit or refund is issued plus interest. All refunds must be made within one year from the date of issuance of the order.
The filings subject to the order were all made under the use-and-file provisions under Florida statute which allows the company to begin collecting premiums prior to and while the filing is being reviewed by the Office and while it is being challenged. If the filing is ultimately disapproved any improperly collected premium must be refunded.
The Office ultimately issued notices of intent to disapprove the filings or disapproved the filings, with the exception of the second Surety filing and the General Liability and Commercial Automobile filings which were pending before the Office during settlement discussions. In all of the other cases AIG requested formal hearings before an Administrative Law Judge.
Evidentiary hearings were held before the Division of Administrative Hearings on the Burglary/Theft and Workers' Compensation rate filings. Following these full evidentiary hearings, two Administrative Law Judges separately concluded that AIG had failed to justify its intended terrorism charge. A Final Order was issued by the Office in July 2005 upholding the judge's disapproval of the Burglary/Theft rate filing. A Final Order has not yet been issued in the Workers' Compensation rate filing pending settlement discussions.
McCarty's order further requires that AIG dismiss all remaining administrative hearings on filings in which orders have not been handed down.
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