Bay State receives $3.4M in AIG settlement [Boston Herald]

Ira Kantor, Boston Herald

By Ira Kantor, Boston Herald
McClatchy-Tribune Information Services

June 21--Massachusetts has received more than $3.4 million to settle a dispute with American International Group, which admitted it had underreported workers' compensation premiums leading to the underpaying of premium taxes and assessments over several years, the state's insurance division said today.

The division was one of eight states that led the investigation into AIG's practices. All 50 states and the District of Columbia will benefit from the settlement agreement with the insurer.

Under the agreement, AIG has agreed its prior financial reports were false with regard to its workers' compensation insurance line, thereby underreporting workers' compensation premium dollars by nearly $2.1 billion nationwide. To correct those reports, AIG has paid both a $100 million penalty and more than $46.5 million in additional premium taxes and assessments to the states.

"While Massachusetts and a few others took the lead in challenging AIG's practices, every state will benefit financially, and the collective voice of insurance regulators across the country has sent a powerful message to the industry that we share the capability and the will to investigate and resolve even the most complex issues in the insurance market," said state Insurance Commissioner Joseph G. Murphy.

The $3.44 million will be placed in the General Fund. The AIG agreement also authorizes the Bay State and other lead states to monitor AIG's operations for the next two years and then conduct an in-depth follow-up examination to confirm AIG is operating under the new rules it has accepted.

The Division of Insurance is an agency within the Office of Consumer Affairs and Business Regulation.