States to share in $146 million from AIG settlement
Allegations of underreporting workers' comp premiums to the tune of more than $2 billion against American International Group have ended with a settlement. The terms of the agreement allow all 51 insurance jurisdictions to share in the fines, taxes, and assessments against the insurance giant.
The settlement, announced last month, ends a multistate probe begun three years ago. The investigation centered on regulatory concerns, the reallocation of underreported workers' comp premiums, the remediation of past premium underreporting, and the need for an ongoing compliance review to ensure that AIG writes and reports workers' comp insurance in compliance with applicable laws, according to the agreement. It alleged that AIG had misreported $2.12 billion of workers' comp premium as general or commercial automobile liability premium.
The terms of the agreement call for AIG to do the following:
- Pay fines totaling $100 million apportioned among all 51 jurisdictions.
- Pay an additional $46.5 million in taxes and assessments.
- File restated financial statements to reflect the reallocation of $2.1 billion of premium to each state and the District of Columbia by March 1.
- Enter into a compliance plan with specific steps to evaluate the carrier's ongoing compliance with rating and reporting requirements.
- Submit to periodic internal and state monitoring and a confirmatory examination after two years.
- Pay $150 million if it fails to meet the terms of the compliance plan.
The amount going to each state varies. Texas stands to gain the most, at nearly $23.6 million in fines, plus additional taxes and assessments. Other states getting large amounts under the settlement include:
- California -- $15.6 million in fines.
- Florida -- nearly $9.4 million in fines, taxes, and assessments.
- Illinois -- $3.8 million in fines.
- Pennsylvania -- nearly $13.3 million in fines, taxes, and assessments.
Read more at the WorkersComp Forum homepage.
January 10, 2011
Copyright 2011© LRP Publications