Insurer Ace Ltd. settles bid-rigging suit for $80 million

By William Murphy

Published on April 28, 2006

The suit alleged that Ace worked with brokers and other insurers to rig bids for casualty insurance. Ace will pay $40 million to compensate policy holders who were victims of the scheme. The remaining $40 million will go to the three states as payment for penalties.

In addition, Ace has agreed to stop paying contingent commissions for casualty insurance placements until 2008. Contingent commissions are paid based on the amount and profitability of the business that brokers and agents generate for an insurance company. An investigation into Ace's practices found that the company's contingent commissions motivated brokers and agents to steer clients to particular insurers.

As part of the settlement, Ace has also agreed to submit an apology for it actions and support legislation to ban contingent commissions.

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