AIG and its workers' compensation affiliates in Pennsylvania will pay the state $16.8 million to settle charges that it violated premium reporting rules.
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.
Pennsylvania is the first state to report a settlement in the multi-state probe. AIG will pay a total of $100 million by the end of June.
"State insurance regulators must be able to rely on accurate company financial data," said Pennsylvania insurance commissioner Michael 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."
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio