Fresh Allegations Surround Quackenbush, Lloyd’s Payment

The Los Angeles Times recently published a report containing new allegations that the California Department of Insurance under former commissioner Chuck Quackenbush covered up a $400,000 payment made by Lloyd’s of London in 1999.

Meanwhile, Lloyd’s is being investigated by several U.S. law enforcement agencies including the FBI.

The payment was made to the state three years after Quackenbush sided with Lloyd’s in a securities fraud suit filed by the state Department of Corporations. Settlement of that case saved Lloyd’s from losing its right to do business in California.

The article maintains that, going contrary to the advice of at least one CDI attorney, Quackenbush’s staff produced a phony invoice that billed the money as payment for “educational briefings.”

It is further alleged that in reality, the money was used to pay legal fees incurred by Quackenbush working on behalf of Lloyd’s and that representatives of the insurer dictated the wording of the invoice. Quackenbush, who later visited London at Lloyd’s expense, was said to have maintained close ties with the law firm LeBoeuf, Lamb, Greene & MacRae, which represents Lloyd’s in the U.S.

It was also reported that in internal memos from the department, concern was expressed by various officials regarding how to pay the large legal fees incurred in the Lloyd’s case without attracting the attention of lawmakers to the expenditures.

Lloyd’s released a written response to the LA Time’s article stating, “Lloyd’s of London is often called upon by regulators in various states to co-operate in providing detailed information. Regulators audit Lloyd’s business frequently and will, on occasion, visit its headquarters in England.

Under U.S. legislation, Lloyd’s is required to reimburse regulators for their expenses when carrying out this type of activity. “Lloyd’s reimbursed the [CDI] for expenses incurred during work to monitor Lloyd’s and gain a greater understanding of its complex financial structure. Lloyd’s, in common with all other major insurers trading in the U.S., makes similar reimbursements to regulators in other states and continues to do so.”

Last November, Insurance Commissioner Harry Low requested that the state legislature order an audit that would include examination of the $400,000 payment.

Topics Excess Surplus London Lloyd's