(Recasts, adds details on settlement, previous filing)
NEW YORK Dec 31 The Travelers Companies
(TRV.N), one of the top U.S. insurers, on Monday agreed to
settle a class-action suit and investigations by several states
into industry-wide insurance practices.
Travelers, the biggest U.S. writer of commercial auto and
business insurance, said in a filing that the settlements are
subject to court approval, and will not have a material impact
on its financial results. It did not provide any settlement
Travelers said the class-action suit, which has been
pending since 2004, involved charges of bid-rigging, contingent
commissions and "finite" insurance, according to filings with
the U.S. Securities and Exchange Commission.
Contingent commissions were paid by insurers to brokers who
brought in the most business to those insurers, even though the
brokers were supposed to be working for clients.
Finite insurance are policies with little risk that were
sometimes used to inflate earnings or camouflage losses.
A Travelers spokeswoman had no further comment on the
In addition to the class-action settlement, Travelers said
it reached agreement with the attorneys general of Florida,
Hawaii, Maryland, Michigan, Oregon, Texas, West Virginia,
Massachusetts and Pennsylvania and the District of Columbia
settling their investigations into compensation and insurance
While contingent commissions are not technically illegal,
attorney generals such as Eliot Spitzer, now New York governor,
have targeted them because they create a conflict of interest
In November, retirement insurer Principal Financial Group
(PFG.N) paid $5 million to settle charges by Connecticut
Attorney General Richard Blumenthal that it concealed payments
to brokers in order to get pension plan business.
In January a U.S. judge in Hartford, Connecticut, will hear
a case involving former General Re Corp and American
International Group (AIG.N) executives who allegedly conspired
to help help AIG inflate reserves on its books by using finite
(Reporting by Ed Leefeldt, editing by Dave Zimmerman)