On May 5 the attorneys general of New York and Connecticut filed lawsuits against the Boston-based Liberty Mutual Group, alleging that the insurer used kickbacks and bid-rigging to increase sales.

The charges are the latest in an ongoing probe of the insurance industry that has already led to settlements from companies like Marsh & McLennan Cos. and American International Group. Liberty Mutual denied the kickback allegations and said that the bid-rigging charges involve two former low-level employees who had “seriously violated our trust and our standards.” 

Liberty Mutual went on to say that it will vigorously defend itself, calling the terms offered so far “excessive and unreasonable: both in terms of magnitude and in their demands that we change legitimate business practices in states outside their legal jurisdiction.”

“Despite cooperating with the Attorneys General investigations for nearly two years, we have been unable to reach a reasonable consensual resolution,” the company said in a statement. “Thus it is in the best interest of our policyholders and employees that we vigorously defend these allegations and allow the judicial process to work.”

Liberty Mutual Opts to Fight, Not Settle, Charges Over Contingent Commissions
(Insurance Journal 5/7/06) 

Liberty Mutual to Contest Allegations By New York and Connecticut Attorneys General (company statement 5/5/06)

May 9, 2006