Louisiana Insurance Commissioner Jim Donelon signs on to national AIG settlement
Louisiana Insurance Commissioner Jim Donelon has signed on to a multistate examination of American International Group’s (AIG) admitted practice of under reporting workers’ compensation insurance premiums. Louisiana is slated to receive $3,842,988.00 in additional taxes and assessments and $2,278,504.00 in fines in a settlement that AIG negotiated. AIG admitted to under reporting over $2.1 billion in workers’ compensation insurance premium between 1985 and 1996.
Commissioner Donelon is convinced that the amount of under reporting by AIG was substantially more than the amount that it concedes in the settlement. Nevertheless, in an effort to put the matter behind us and collect much needed funds for the state of Louisiana, he has signed off on the settlement agreement. All 49 of the other state regulators also signed off on this agreement in part motivated by the fact that any fine levied against AIG is no doubt passed on to the American taxpayers as a result of the $180 billion bailout that AIG received in 2008 from the United States Treasury. That bailout was necessitated by AIG’s non-insurance investment practices.
“Providing accurate company financial data is essential to insurance regulation. Under-reporting premiums by a company the size of AIG could have adversely affected the Louisiana workers’ compensation system. I am pleased that a settlement agreement has been reached and that the Louisiana workers’ compensation system is no longer compromised,” states Commissioner Donelon.
In total nationwide, AIG agreed to pay $100 million in fines and payment of an additional $46.5 million in premium taxes and assessments. In addition to the monetary penalties, the settlement includes the following:
- Adoption of a compliance plan ensuring the company’s compliance with workers’ compensation rates, forms, and financial reporting requirements
- Monitoring the company’s compliance with the plan for a 24-month period
- An additional fine of up to $150 million if an examination at the end of the 24-month period demonstrates non-compliance by the company.