Hilb Rogal & Hobbs Co., the nation's eighth-largest insurance and risk management intermediary, said Wednesday that it would set up a $30 million national fund as part of an agreement to resolve the Connecticut attorney general's investigation of allegedly improper payments made by the company's Hartford office.
The Richmond, Va., company also said it expects to record a pretax third-quarter charge of $40 million to $50 million — the estimated amount needed to resolve regulatory issues related to agent and broker compensation, excluding the costs of private lawsuits.
The agreement's terms set a standard for compliance and disclosure while maintaining Hilb Rogal's agency compensation model, including contingent commissions, the company said.
The $30 million fund is to be distributed among those U.S. clients of the company who choose to participate. The settlement agreement also sets up a business practices committee of the company’s board of directors and incorporates a Jan. 1 company policy to stop collecting contingent commissions on fee-based brokerage business, though retaining them for traditional agency business.
The company is to pay an administrative fine of $250,000 to the Connecticut Insurance Department and submit quarterly reports on the company’s Connecticut subsidiary as part of a stipulation and consent order with the state insurance commissioner.
