Miami, FL: (Dec-31-07) Florida, eight other states and the District of Columbia brought a class action lawsuit against Travelers Cos., alleging that the company engaged in bid rigging along with the insurance broker Marsh & McLennan. The suit claimed that Travelers engaged in improper business steering in the commercial insurance market, which resulted in higher premiums being paid by Florida governmental entities, companies and nonprofit organizations. Further, Travelers allegedly conspired with Marsh & McLennan and other brokers to create the illusion of a competitive bidding process by submitting fake bids even though the brokers had already determined which insurer would receive a particular policyholder's business, the Florida officials said.
As part of a settlement reached, the company agreed to pay a multistate task force $6 million to resolve allegations. Sources stated that the Florida Attorney General's Office, Department of Financial Services and Office of Insurance Regulation will receive a combined $1.1 million of the settlement. The money will fund a reimbursement pool for affected public entity policyholders and repay the state agencies' costs of investigation. Apart from the monetary payout, Travelers has agreed to a consent decree and final judgment that will provide comprehensive injunctive relief, including a requirement to disclose compensation that Travelers pays to insurance brokers. The company will also be required to disclose to all customers and prospective policyholders the ranges and averages of payments it made to insurance brokers on specific lines of insurance. [
