Insurer AIG Settles Workers Compensation Dispute
By Space Coast Daily // June 5, 2012
TALLAHASSEE, FLORIDA – Florida Insurance Commissioner Kevin McCarty has announced a settlement agreement that will require American International Group (AIG) to pay millions to all 50 states for underreporting $2.12 billion in workers compensation insurance.
“AIG systematically underreported workers’ compensation insurance premium by putting this premium into the general liability or commercial automobile liability categories,” McCarty said in a press release.
AIG will pay $14.3 million to a group of Florida state agencies as part of a nationwide $146.5 million settlement. over a dispute involving workers’ compensation insurance.
“The practical effect of this misreporting was to report premium in lines of business with lower residual market obligations or premium tax rates and assessments,” McCarty said. “I am pleased by the collaborative multistate investigative effort that will yield millions of dollars in unpaid taxes owed to the states.”
Florida’s Office of Insurance Regulation is in line to obtain $5.6 million in fines and penalties with an additional $8.7 million split between the Department of Financial Services Division of Workers’ Compensation, the Department of Revenue and the Florida Workers’ Compensation Insurance Guaranty Association.
Besides paying a $100 million nationwide penalty, the settlement will include $46.5 million in premium taxes and assessments.
Under McCarty, Florida became one of the lead states in the multistate examination of AIG, along with Delaware, Indiana, Massachusetts, Minnesota, New York, Pennsylvania, and Rhode Island.
As part of the agreement, AIG entered into a compliance plan concerning the financial reporting of its workers’ compensation premiums and has agreed to be monitored and subject to a follow-up examination in two years.