American International Group has agreed to pay $100 million in penalties and $46.5 million in delayed taxes and assessments for mis-reporting more than $2 billion of workers’ compensation accounts as if they were general liability insurance -- a practice that for years enabled the largest U.S.-based insurer to escape its responsibilities for financing a workers’ comp system that was under extra financial stress.
Pennsylvania, which was supposed to be one of AIG’s lead regulators, will collect $8.6 million in fines, $3.6 million for its workers’ comp fund, and $4.6 million in taxes and assessments as its share. That’s the biggest fine in the agency’s history, insurance commissioner Michael Consedine said in a statement last week.
But why did it take so long? AIG is being busted for misconduct that dates back “primarily between 1985 and the early 1990s,” Pennsylvania insurance department spokeswoman Rosanne Placey told me. 
Internal memos identifying the company’s “illegal” and “criminal” deceit in its claims reporting were brought to the personal attention of longtime boss Maurice R. “Hank” Greenberg all the way back in 1992, according to the texts of internal memos made public by the New York State insurance department after a whistle-blower complaint in the year following Greenberg’s 2005 departure.
To me there’s a closing-the-door-after-the-horses escaped quality to this action, and it’s an indictment, not just of Greenberg’s high-handed management of the largest U.S.-based insurer, but also of the piecemeal state regulatory aparatus that failed to stop him for so many years.
Pennsylvania’s Placey disagrees: “This settlement shows coordinated state insurance regulation at its best,” she told me. “We took on one of the biggest and most sophisticated companies in the world that was engaging in complex accounting misreporting and came down on them hard in the end.”
So what will happen to Greenberg, who’s still suing the government for taking over the company he built, and to his henchmen who ignored their own compliance people and kept the scheme quiet?
“Those involved are no longer with the company,” Placey told me. Current managers “cooperated” and agreed to a compliance plan with extra penalties for violations. And “all the relevant information has been shared with law enforcement.” 
American International Group has agreed to pay $100 million in penalties and $46.5 million in delayed taxes and assessments for mis-reporting more than $2 billion of workers’ compensation accounts as if they were general liability insurance -- a practice that for years enabled the largest U.S.-based insurer to escape its responsibilities for financing a workers’ comp system that was under extra financial stress.
Pennsylvania, which was supposed to be one of AIG’s lead regulators, will collect $8.6 million in fines, $3.6 million for its workers’ comp fund, and $4.6 million in taxes and assessments as its share. That’s the biggest fine in the agency’s history, insurance commissioner Michael Consedine said in a statement last week.
But why did it take so long? AIG is being busted for misconduct that dates back “primarily between 1985 and the early 1990s,” Pennsylvania insurance department spokeswoman Rosanne Placey told me.
Internal memos identifying the company’s “illegal” and “criminal” deceit in its claims reporting were brought to the personal attention of longtime boss Maurice R. “Hank” Greenberg all the way back in 1992, according to the texts of internal memos made public by the New York State insurance department after a whistle-blower complaint in the year following Greenberg’s 2005 departure.
To me there’s a closing-the-door-after-the-horses escaped quality to this action, and it’s an indictment, not just of Greenberg’s high-handed management of the largest U.S.-based insurer, but also of the piecemeal state regulatory aparatus that failed to stop him for so many years.
Pennsylvania’s Placey disagrees: “This settlement shows coordinated state insurance regulation at its best,” she told me. “We took on one of the biggest and most sophisticated companies in the world that was engaging in complex accounting misreporting and came down on them hard in the end.”
So what will happen to Greenberg, who’s still suing the government for taking over the company he built, and to his henchmen who ignored their own compliance people and kept the scheme quiet?
“Those involved are no longer with the company,” Placey told me. Current managers “cooperated” and agreed to a compliance plan with extra penalties for violations. And “all the relevant information has been shared with law enforcement.”