NEW YORK – The state of Connecticut has accused a unit of Marsh & McLennan Cos Inc (MMC) of illegally inflating insurance costs for consumers nationwide, Attorney General Richard Blumenthal said on Monday.
The antitrust suit names the Guy Carpenter unit, Marsh & McLennan's risk and reinsurance specialist. It seeks unspecified damages, restitution and civil penalties.
The suit is the latest blow to Marsh & McLennan, whose Chief Executive Michael Cherkasky has been looking to regain investor confidence since an $850 million settlement in 2005 of a suit brought by the state of New York.
Marsh & McLennan, the world's largest insurance broker, did not return calls seeking comment.
The company's shares, down more than 14 percent this year, were down 36 cents, or 1.3 percent, to $26.41 in Monday afternoon trading on the New York Stock Exchange.
Blumenthal charged Guy Carpenter, which helps insurers spread the risk of losses by placing coverage with reinsurers, with creating markets that were, in its own words, "insulated from competition."
"Guy Carpenter served as ringleader in choreographing the reinsurance market to fix prices, stifle competitors and collect excessive profits at the expense of the entire industry," Blumenthal said in a statement.
He added that the "schemes were enabled by a shifting coterie of more than 20 co-conspirators — reinsurers willing to play Guy Carpenter's game of deceit, and damage consumers."
The lawsuit names Excess Reinsurance Co, based in Philadelphia, and partly owned by Guy Carpenter, as a defendant in the action, and said "co-conspirators" included Arch Reinsurance Company, a U.S. unit of Bermuda-based Arch Capital Group (ACGL), Aspen Insurance UK Limited, a unit of Bermuda-based Aspen Insurance Holdings (AH); and Swiss Reinsurance America Corp, a unit of reinsurance giant Swiss Re.
Blumenthal said the practices potentially cost consumers "hundreds of millions of dollars," and had gone undetected for nearly 50 years.
He blamed the "unregulated" nature of the reinsurance industry, for the matter having flown under the radar for so long.
Guy Carpenter over time exploited about 170 insurers, Blumenthal charged.
Monday's announcement comes after Blumenthal issued about 20 subpoenas in July as part of an investigation into anti-competitive practices in the reinsurance industry.
Blumenthal said the investigation was "active and ongoing."
The state of Ohio in August filed an antitrust suit accusing Marsh & McLennan and other insurers and their subsidiaries of price-fixing and anti-competitive behavior.
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