Chubb settles for $15mn and ends contingent commission payments
US insurer Chubb Corp became the latest company to settle with US regulators, on 28 December, and pledged to end the paying of contingent commissions to brokers at the end of 2006.
Under the terms of the settlement with the attorneys general of New York, Connecticut and Illinois, Chubb will pay $15mn in restitution and $2mn in costs.
“With this settlement, Chubb has stepped up and taken the lead in adopting reforms designed to improve transparency concerning compensation of brokers and agents,” said David Brown, the New York attorney general's investment protection bureau chief, in a press release. “Contingent commissions, and the conflict of interest such commissions create, need not be a part of the insurance business.”
The statement said its investigation found that Chubb made undisclosed payments to insurance brokers and agents that “encouraged them to steer business to Chubb”.
The $15mn settlement will be made to Chubb excess casualty policyholders who purchased their policies through Marsh & McLennan Cos.