Topeka, KS – More than $560,000 in workers compensation insurance settlement money paid recently to the Kansas Insurance Department will be deposited into the state’s general fund, Sandy Praeger, Commissioner of Insurance, announced today.
The settlement money comes from AIG, the national financial services company, as a result of a multi-state market conduct examination. The examination by state regulators focused on allegations that AIG underreported its workers compensation insurance revenues.
By Kansas statutory law, insurance settlement money is regularly returned to the state general fund.
“Underreporting of premium revenues allowed AIG to pay less in taxes,” said Commissioner Praeger. “And since workers comp premiums are taxed at a higher rate than auto, liability and other types of insurance, the company gained an unfair competitive advantage.”
Under the nationwide settlement, AIG will pay a total of $146 million to the states.
Market conduct examinations include reviews of insurance company practices regarding treatment of policyholders, the way premium rates are charged and the way the insurer handles claims. The AIG investigation began in 2008.
The Kansas Insurance Department, a fee-funded agency, contributed nearly $143 million to the state general fund last year from premium fees and taxes paid by insurance companies. The department’s annual operating budget also comes from insurance company fees and taxes, not the state general fund.