Case Details

Year Initiated/Committed


Year Resolved


Settlement Amount

$182,000 restitution, $56,000 to state


Massachusetts Superior Court (Suffolk)

Docket Number


Lead State


Participating States



The Chubb Corporation

Case Description

State reached settlement with The Chubb Corporation (“Chubb”) resolving allegations that Chubb’s compensation practices offered improper incentives and enabled Boston-based insurance brokerage firm William Gallagher Associates Insurance Brokers, Inc. (“WGA”) to direct business to Chubb. As part of the settlement, Chubb will pay $182,815 to WGA customers and $56,196 to the Commonwealth.
The settlement stemmed from an earlier suit against William Gallagher Associates (WGA), an insurance broker. According to the Gallagher complaint, Chubb loaned WGA in excess of $3 million, but offered to forgive this loan and any accrued interest if WGA directed enough profitable business to Chubb. Chubb also invited WGA to invest in a Chubb-sponsored reinsurance company through which WGA insured a portion of numerous insurance policies belonging to WGA’s clients. Reinsurance is insurance that companies like Chubb purchase to protect themselves against their policyholders’ claims. According to the complaint, WGA’s participation in Chubb’s reinsurance program turned WGA into a reinsurer with a financial interest in keeping its customers’ highly profitable insurance policies with Chubb. Chubb also provided WGA with a “trust fund” that WGA could utilize to lower Chubb’s quoted premiums. Chubb allegedly maintained the trust fund so that WGA could draw against it to offer Chubb’s insurance policies at lower prices in situations in which Chubb’s premium quotes were higher than the quotes issued by other insurers.
Under the terms of the settlement reached with Chubb, the insurance company will pay $182,815 in restitution to certain WGA customers and $56,196 to the Commonwealth. Chubb agreed that it will no longer make loans to Massachusetts insurance brokers unless the loans are disclosed to customers. Chubb also agreed to limitations concerning participation in reinsurance companies and to stop providing “trust funds” to Massachusetts agents and brokers.