An insurance broker has paid the state $754,804 to settle allegations that it accepted undisclosed compensation from insurance carriers in exchange for placing insurance for the state, Attorney General Richard Blumenthal said.
The state used the insurance brokerage firm R.C. Knox of Hartford to place insurance for the State Insurance Risk Management Board and the Connecticut Development Authority from 1997 to 2004.
The state paid a fee to R.C. Knox, which assured state officials it was not receiving commissions from insurance carriers to place insurance for the risk management board, Blumenthal said. It said its fee was the “sole source of revenue on this account,” the attorney general said.
Yet R.C. Knox accepted $415,058 in “improper concealed compensation” from insurers for placing the state insurance, Blumenthal said. The settlement accounts for the amount of the compensation R.C. Knox accepted, plus $339,746 in interest.
“The state relied on R.C. Knox for the best insurance deal for taxpayers, not the best secret commission deal for R.C. Knox,” Blumenthal said.
Brent DiGiorgio, a spokesman for People’s Bank, which owns R.C. Knox, denied wrongdoing. R.C. Knox obtained competitive bids on policies in “complete accordance with the state’s guidelines for bidding,” he said.
The brokerage firm settled “to avoid the uncertainty and expense of contesting possible claims the attorney general may have had in connection with this issue,” DiGiorgio said.
R.C. Knox also agreed to no longer accept so-called “contingent commissions” in exchange for any insurance placements for the state, Blumenthal said.
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