A law firm filed a class-action lawsuit against St. Paul Travelers Cos., accusing it of making false and misleading statements regarding commission payments. Lawyers have filed similar lawsuits against several insurance companies and brokers across the country in recent weeks, including American Insurance Group and Ace Ltd., in the wake of insurance industry investigations led by New York’s attorney general.
St. Paul Travelers is the nation’s second-largest insurer of businesses. The lawsuit was filed by the New York law firm of Wolf Haldenstein Adler Freeman & Herz in U.S. District Court in Minneapolis. It alleges that the company paid hundreds of millions of dollars in “bribes or kick-backs, known as ‘contingent commissions,’ in return for insurance brokers steering them business and shielding them from competition” from 2000 to 2004.
The lawsuit also alleges that the company’s actions artificially inflated the price of the company’s common stock. The company’s “revenues and earnings would have been significantly less had the company not engaged in such unlawful practices,” it claims.
“We believe this suit is totally without merit and we intend to defend against it vigorously,” said Joan Palm, a spokeswoman for St. Paul Travelers.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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