AIG pays Vermont $500,000 in multi-state insurance regulatory settlement
Vermont Commissioner of Financial Regulation, Stephen W Kimbell, announced today that the Insurance Division received $500,000 in fines and penalties as part of a global settlement agreement between the American International Group, Inc (AIG) and its affiliates with all 50 states and the District of Columbia. The settlement is a result of AIG misreporting $2.12 billion of workers’ compensation premiums as other lines of insurance. As part of the settlement agreement, AIG agreed to pay a national penalty of $100 million, and $46.5 million in additional premium taxes and assessments.
"This settlement represents significant work through a multi-state collaborative effort. The lead states of Florida, Delaware, Indiana, Massachusetts, Minnesota, New York, Pennsylvania, and Rhode Island deserve a great deal of credit in bringing this matter to a satisfactory conclusion,” stated Commissioner Kimbell.
According to a multi-state examination report issued by the lead states in December 2010, AIG systematically underreported workers' compensation insurance premium by improperly accounting for the premium as general liability or commercial automobile liability insurance.
“State insurance regulators must be able to rely on accurate company financial data. In AIG’s case, the company misstated its financial accounts for years by reporting workers’ compensation as a type of business with lower tax rates and other obligations. This gave the company an unfair competitive advantage,” explains Commissioner Kimbell.
AIG has corrected previously filed financial reports and reallocated approximately $2.1 billion of premiums from other lines of insurance to workers’ compensation. As part of the agreement, AIG is subject to a compliance plan concerning the financial reporting of its workers’ compensation premium, and going forward agreed to be monitored and subject to a follow-up examination by the lead states in two years.
State of Vermont, 6.18.2012