In the midst of the holiday season 50 states and the District of Columbia received an early gift. On December 22, 2010 the Pennsylvania Department of Insurance announced an agreement had been made with American International Group, Inc regarding workers compensation violations. As a result, the bailed-out insurer will pay $100 million in finest to all 50 states as well as the District of Columbia.
As stated in the press release,
Under the terms of the settlement, AIG will:
- Pay a $100 million fine to be apportioned among all the participating states;
- Pay approximately $46.5 million in additional taxes and assessments; Enter into a compliance plan containing agreed-upon specific steps and standards for evaluating AIG’s ongoing compliance with workers compensation insurance rating and reporting requirements;
- Submit to periodic internal and state monitoring and a confirmatory examination at the end of 24 months;
- Agree to pay a contingent potential fine of up to $150 million if AIG fails to meet the terms of the compliance plan.
This agreement is the end result of an examination led by Delaware, New York, Pennsylvania, Rhode Island, Florida, Massachusetts, Minnesota and Indiana. AIG was found to be non-compliant with laws relating to rating, forms and financial reporting.
As stated in Reuters, “In early 2006, AIG entered into a settlement with federal prosecutors and securities regulators and New York prosecutors and insurance officials over a range of issues, including the underpayment of taxes on workers’ comp premiums. AIG took more than $1 billion in charges at the time to cover the settlement.”