PA Insurance Department Levies Largest Fine in Agency's History Against AIG
HARRISBURG, Pa., May 31, 2012 /PRNewswire-USNewswire/ -- American International Group Inc., AIG, and its workers compensation insurance affiliates will pay Pennsylvania more than $16.8 million in fines and assessments, Insurance Commissioner Michael Consedine announced today.
This reflects a settlement agreement in a multi-state probe that examined whether AIG violated premium reporting rules governing workers' compensation insurance.
The penalty amount, which is the largest ever levied by the department, includes $8.6 million in fines, $3.6 million to the Workers' Compensation Security Fund, and $4.6 million in premium taxes and assessments.
"State insurance regulators must be able to rely on accurate company financial data," said Consedine. "In AIG's case, we found that the companies, which operated in a pooled arrangement, had underestimated their liabilities under inter-company policyholder guarantees. As part of this agreement, AIG corrected previously filed financial reports and reallocated approximately $2.1 billion of premium from other lines of insurance to workers compensation."
Pennsylvania was a lead state in achieving this final agreement, which became fully effective this week. This culminates an effort among all of the nation's state insurance regulators to investigate and resolve complex issues occurring over an extensive period of time. AIG will pay a total of $100 million in penalty, as well as $46.5 million in additional premium taxes and assessments, to the states prior to the end of June.
"This global resolution addresses past issues while looking to the future by specifying AIG's agreement concerning its ongoing operations," Consedine added. "At this time, AIG's current management has shown its commitment to a culture of regulatory compliance."
The final agreement is available on the Insurance Department's website at www.insurance.pa.gov. Click on "Consumer Protection."
Media contact: Rosanne Placey or Melissa Fox, 717-787-3289
SOURCE Pennsylvania Department of Insurance