Marsh & McLennan Cos.’ Guy Carpenter and Co. division has agreed to a $4.25 million settlement with Connecticut to resolve a three-year-old landmark antitrust case accusing the world’s second-largest reinsurance broker of price-fixing and other abuses.
Attorney General George Jepsen announced the settlement Monday with Guy Carpenter and Excess Reinsurance.
Both companies deny the state’s claims but agreed to the payment and to take steps to reform their business practices, including enhanced disclosure and a formalized system for obtaining competitive quotes to ensure its clients receive the best rates and terms for insurance.
“Like the lawsuit, this settlement is ground-breaking in that it requires Guy Carpenter and a number of reinsurers to change the way they conduct business – not just in Connecticut, but on a nationwide basis,” Jepsen said. “As a result of the business reforms that Guy Carpenter has agreed to, the market for reinsurance will be more transparent, more competitive and, ultimately, may lead to lower prices for insurance.”
Then Attorney General Richard Blumenthal filed suit in October 2007 against the parties, accusing them of conspiring with reinsurersto fix prices, eliminate competition and substantially increase profits in the reinsurance market, The Associated Press reported at the time.
Insurance companies buy reinsurance as backup coverage, to completely or partly insure the risk they have assumed for their customers.
In 2009, the state reached a $1.3 million settlement with The Hartford Financial Services Group, resolving claims that the insurer participated in the anticompetitive schemes that illegally inflated insurance and reinsurance costs nationwide.
