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Guy Carpenter Settles Antitrust Case With Attorney General Jepsen For $4.25 Million

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Attorney General George Jepsen on Monday announced a $4.25 million settlement with reinsurance broker Guy Carpenter & Company LLC, stemming from a 2007 antitrust case.

The state sued Guy Carpenter, a New York subsidiary of Marsh & McLennan Cos. with offices in Hartford and Norwalk, in 2007 for allegedly conspiring with dozens of other reinsurers, including Excess Reinsurance Underwriters to illegally inflate costs for insurance companies and consumers over several decades. Guy Carpenter was part owner of Excess Re.

Reinsurance is bought by insurers to cover losses after they exceed a certain threshold. The premise of reinsurance reduces an insurer's exposure to damage from major catastrophes such as hurricanes.

Jepsen's office said Guy Carpenter created select groups of reinsurers, called "facilities," and pushed business to those companies for undisclosed commissions and bonuses. The reinsurers agreed not to compete against prices and terms set by Guy Carpenter in exchange for the business, Jepsen's office said.

"The attorney general had alleged that facilities offering reinsurance to more than 150 small-to-midsized insurance companies over decades were anti-competitive and unfair," the company said in a prepared statement. "Guy Carpenter vigorously denied these claims as contrary to both the relevant facts and law."

The company said reinsurers were "pro-competitive," and offered clients "the best available terms for reinsurance."

This is the latest development in a saga of investigations by attorneys general into alleged price fixing by insurers and brokers. In 2004, then-New York Attorney General Eliot Spitzer and then-Connecticut Attorney General Richard Blumenthal teamed with other investigators in filing dozens of lawsuits targeting brokers and insurers. The result was settlements that totaled about $3 billion in restitution and more than $275 million in penalties.

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Matthew Sturdevant is the insurance reporter at The Hartford Courant. He grew up in East Aurora, N.Y., a small village near Buffalo. He started his journalism career in 1999 ... read more

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