Industry under-reported policies to reduce pool payments
AIG must hand over records showing its workers’ compensation (employers’ liability) business as part of an alleged $1bn fraud case brought by rivals, Bloomberg reports.
Liberty Mutual sued AIG last year, saying the company underpaid industry-funded pools by hiding revenue used to calculate its obligations. AIG has filed a complaint against rivals, including Liberty Mutual and Travelers, saying underreporting happened industrywide.
“What they’re trying to prove is that AIG was systematically misreporting workers’ compensation premiums as being other lines and knowingly avoiding proper fees,” said Edward Priz, president of Riverside, Illinois-based commercial insurance consulting company Advanced Insurance Management LLC.
“AIG is basically saying, to whatever extent we did this, we didn’t do anything different from you guys.”