Hartford Insurance settles claims with CT and NY AG's
Thursday, May 11, 2006 at 10:43AM In a case which goes to the heart of the broker compensation and disclosure issues that are increasingly becoming part of the insurance and settlement industry, Hartford Insurance Group settled with the Attorney Generals of CT and NY, respectively Attorney's General Blumenthal and Spitzer.
The WSJ law blog has a post here, and we will be posted a pdf of the settlement in our resources section later today.
As readers of our blog and channel realize, this issue of broker compensation, duty to disclose and off the book payments is becoming more and more a focus of both criminal and civil cases against the insurance industry, so we will be focusing on it in great detail in the coming months. Scroll down and take a look at the Jack Melligan interview for a hint of what we will be discussing.
As promised the PDF of the press release and details of the case are available here.
Thanks to Attorney Dick Risk for forwarding it to me for posting here.
Reader Comments (3)
Does this settlement cover the investigation the AG is making on their structured settlement practices? The blog seems to indicate it's only pension annuities.
Q
I just posted the pdf of the full press release and this case is dealing only with the group annuity contracts that Hartford wrote through a select group of brokers that specialized in terminal pension funding. In that market, as most know, when a defined benefit qualified plan is terminating, the pension trustee looks to buy annuities to guarantee and fund the future promised benefits to the vested pension fund beneficiares. In these cases you purchase a group annuity, each funding the specific future liability, and if interest rates and mortality rates of the annuity company are more aggressive then those of the plan actuary, you can actually have excess assets in the plan that revert back to the corporation. The proverbial "over funded" pension plan. What it appears was being done here was that Hartford was providing marketing and support dollars to a select group of key brokers as a means of being more competitive in obtaining business, as their rates or mortality assumptions were keeping them out of the market.
The obvious harm in such a senario is that the corporate entity has a fiduciary responsibility to obtain the lowest cost, and if there is collusion on the part of the brokers to get a bid from another market that isn't the lowest, then you have substantial economic harm.
It's my opinion that the AG's in both states, and in others, are really taking a serious look at life and annuity broker compensation, and while this settlement didn't cover the alledged practices in the structured settlement suit against Hartford, it would certainly demonstrate a bright line test of what they would deem unacceptable conduct.
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before doing any type of transaction wiht Hartford do a deep search on them its your best interest!