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
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 penalities, 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.