Bid-Rigging Settlement

News Release:

Texas Attorney General Greg Abbott Monday announced Texas and 10 other states have reached agreed final judgments with one of the world's largest insurers, requiring the company to implement a variety of business reforms and refund $9 million to Texas commercial policyholders as part of an antitrust settlement initiated last March.

Today's filing in Travis County District Court grants the Attorney General broad enforcement authority over the previously announced settlement with Zurich American Insurance Co. and its U.S. subsidiaries.

The multi-state investigation alleged the company participated in widespread, deceptive bid-rigging, price-fixing and other schemes in the commercial insurance market, orchestrated by Marsh & McLennan and other large brokers. In the process, large and small companies, nonprofit organizations and government offices that purchased commercial lines of insurance from Zurich were misled into believing they were receiving the most competitive commercial premiums available.

"Anti-competitive business practices will not be tolerated in Texas," said Attorney General Abbott. "Today's settlement brings greater transparency and fairness to the commercial insurance markets in Texas and across the nation. This settlement paves the way for states to protect businesses from falling victim to the kind of deception that raised insurance prices above competitive levels."

Texas led the 15-month investigation, which revealed that Zurich conspired with brokers at the center of the conspiracy in a "pay-to-play" scheme to overcharge policyholders for their commercial insurance policies. The scheme devised by broker Marsh & McLennan gave commercial policyholders the illusion of a legitimate competitive bidding process on policies. In fact, Marsh had secretly pre-designated certain insurers to win bids, but the results for the policyholders were actually inflated rates, not competitive bids. The scheme was successful because insurers such as Zurich failed to disclose to policyholders that it paid secret "contingency commissions" to insurance brokers.

The states contended that Zurich showed a willingness to submit fake quotes and was rewarded with protection from competition so it could set artificially high premiums and profit on other lucrative accounts. The brokers also engaged in anti-competitive conduct by steering contracts away from insurance companies that refused to participate in the scheme.

In a companion settlement of a class action lawsuit in New Jersey, Zurich will be required to distribute about $122 million in refunds to commercial policyholders, including an estimated $9.3 million to Texans. These policyholders can obtain information about this class action settlement by accessing

Today's Texas settlement eliminates these schemes, requiring the disclosure of all compensation paid to brokers and agents. This information will be helpful to policyholders in making decisions on obtaining or renewing insurance with Zurich.

The multi-state coalition supporting Texas includes California, Florida, Hawaii, Maryland, Massachusetts, Oregon, Pennsylvania, Virginia and West Virginia.