American International Group Inc. and its affiliates have agreed to pay $146.5 million to all 50 states and the District of Columbia to settle a complaint that it misreported billions of dollars in workers compensation premiums in past years.
Florida Insurance Commissioner Kevin McCarty, whose state was among those pressing the complaint, announced the settlement Monday.
AIG was accused of misreporting $21.1 billion in workers compensation premium as other lines of insurance in past years.
The company agreed to pay a $100 million national penalty and $46.5 million in additional premium taxes and assessments. McCarty said Florida’s share of the settlement will total $14.3 million. He said the misreported premiums had wrongly reduced AIG’s taxes and assessments.
The State of Pennsylvania, a lead state in the probe, says it will receive more than $16.8 million in fines and assessments as part of the settlement, which the state’s insurance department says is the largest fine levied in the agency’s history. Pennsylvania says its share breaks down to $8.6 million in fines, $3.6 million to the state’s Workers’ Compensation Security Fund and $4.6 million in premium taxes and assessments.
In a statement, Pennsylvania Insurance Commissioner Michael Consedine says, “State insurance regulators must be able to rely on accurate company financial data. In AIG’s case, we found that the companies, which operated in a pooled arrangement, had underestimated their liabilities under inter-company policyholder guarantees.”
He adds, “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.”