The New York Attorney General's 2004 insurance investigation revealed compelling evidence pointing to the widespread practice of bid rigging and other improper transactions perpetrated by ACE, AIG, and Marsh, among others. ACE avoided a trial by paying a large settlement, agreeing to significantly change its business practices, and the company issued a formal apology to consumers who had been victimized.
Client Sues ACE Unit over Arbitration Dispute
Matson Terminals Inc. said that in 1980 it bought an excess workmen’s compensation and employer’s liability policy from the ACE Group unit. The coverage period ran from January 1st, 1980 to January 1st, 1982 and included an endorsement to establish the value of certain claims.
During the policy period, the Honolulu-based ocean shipping and terminal operator said that 12 employees sustained injuries that left them permanently and totally disabled. Matson has paid compensation and medical benefits, but now it and INA are in disagreement over ongoing valuations.
Matson said that INA has wrongly contended that no part of the company’s assessment payments qualifies as a covered loss, and that no coverage is due because any losses are less than the amount of retention that Matson agreed to - $250,000 per claim - when the policy was issued.
Matson said the claims ranged in size from just under $42,000 to $698,000. In aggregate it valued them at $3.51 million.
Matson further said that while INA may argue that the arbitration provision is of limited scope, “that is wrong. It covers the central issue presented by every claim: how much must the insurer pay on account of the claim.”
Citing an endorsement to the policy, Matson said that in the event that it and INA cannot agree on the annuity value or value of a claim, their dispute will be submitted to binding arbitration in San Francisco. So it has sued INA in federal court in San Francisco in an effort to compel the insurer to arbitrate.
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