Settlement Reached In Dispute Over Contingent Commission Insurance Practices

January 9, 2009
San Jose, Calif.

The parties to County of Santa Clara and the People of the State of California v. Driver Alliant Insurance Services, Inc., pending in the Superior Court of the State of California, County of Alameda before the Hon. Robert B. Freedman, today announced a settlement of their dispute over insurance business practices as they pertain to the brokerage of insurance policies purchased by California governmental entities. The lawsuit, brought by the County of Santa Clara on behalf of a class of California public entity clients of Alliant Insurance Services, and by the San Francisco City Attorney on behalf of the People of the State of California, addressed the practice of insurance companies’ payment to brokers of commissions contingent on the brokers meeting certain criteria such as volume or profitability of policies placed with the insurer.

This case was resolved after three and a half years of extensive litigation by the parties. In the settlement, Alliant agreed to increase disclosure of information it provides public entity clients concerning the compensation Alliant receives from insurance providers. Alliant has further agreed to pay $3.2 million in restitution to a class of its California public entity clients, and to a five year ban on receipt of contingent commissions related to its placement of insurance on behalf of California governmental agencies. The ban is subject to the caveat that any party can petition the court at any time during the five year period to terminate the ban, or to make it permanent.

“This settlement is the product of long and difficult but good faith negotiations which produced a win-win for all parties,” said Joe De Briyn, lead attorney for Alliant. "It brings increased transparency and hence public confidence to the difficult and complicated risk management process while also resolving concerns raised by both parties. Going forward, public entities and the Joint Powers Authorities that act on their behalf when purchasing insurance coverage will be better informed on the many issues surrounding the compensation of insurance brokerage, enabling them to make more informed and creative business decisions,” De Briyn said.

“As public attorneys we have a responsibility to guard against any threat against the public fisc,” said Ann Miller Ravel, Santa Clara County Counsel. “Public entities have a right to question their service providers and hold those providers accountable for every dollar paid for their services. Having resolved this dispute with our insurance brokers, we are confident that our relationship with Alliant will continue to grow in an environment of full and complete disclosure.”

“Working together, we’ve agreed to meaningful reforms in business practices to enhance transparency about Alliant’s compensation from insurance companies, and to avoid the potential conflicts such compensation can raise,” said San Francisco City Attorney Dennis Herrera, who represents the People of the State of California in this action. "I applaud Alliant for its willingness to resolve these important issues. Beyond settling a single case, this agreement has created a model for other insurance brokers to encourage open and transparent insurance markets.”


The class of California public entities is represented by the law firms of Coughlin Stoia Geller Rudman & Robbins LLP and Renne Sloan Holtzman & Sakai LLP.

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