Connecticut Hits Marsh & McLennan Subsidiary with Antitrust Suit
A subsidiary of Marsh & McLennan Cos. Guy Carpenter & Co., was hit with a lawsuit by Connecticut's Attorney General Richard Blumenthal, claiming the reinsurance broker violated Connecticut's antitrust and unfair trade practices acts and essentially increased rates for consumers.
In a state lawsuit, the attorney general accuses Guy Carpenter & Co. of conspiring with reinsurers to fix prices, eliminate competition and substantially increase profits in the reinsurance market.
The lawsuit also names Philadelphia-based Excess Reinsurance Co., a reinsurer partly owned by Guy Carpenter, to which it allegedly funneled business without disclosing to clients its ownership interest.
In a statement by Guy Carpenter, it claims that Mr. Blumenthal's lawsuit is based on a "fundamental misunderstanding of reinsurance facilities that have been in operation for the benefit of small- and midsize clients for as long as 50 years."
"As many of our clients have confirmed during this investigation, these facilities result in improved availability and terms of reinsurance and ultimately benefit insurance buyers," the statement said. "Simply put, there is no basis for the attorney general's lawsuit and we intend to defend ourselves vigorously."
Connecticut's lawsuit could have national ramifications because it affects homeowners and car buyers across the country and 170 insurance companies.
Mr. Blumenthal said thousands of people likely paid premiums up to 40% higher than industry averages, costing them potentially hundreds of millions of dollars.
The lawsuit filed in state court seeks damages, restitution and civil penalties for injuries suffered by Connecticut consumers.
Published on October 9, 2007
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