Nineteen insurance companies have filed suit against American International Group, Inc. alleging fraudulent inflation of reinsurance claims.
John Hancock, Boston; First Allmerica, Worcester, Mass.; and American Reinsurance Company, Princeton, N.J., are among the companies bringing the action.
The suit alleges that the New York-based AIG filed $73 million in "grossly inflated" claims against the 19 reinsurance entities.
AIG spokesman Joe Norton said that the company denies "all allegations of wrongdoing including the allegations of fraud."
"This is a reinsurance collection dispute that would normally be resolved in a private arbitration between the parties," Mr. Norton said. "Before the suit was filed in Massachusetts state court, AIG had commenced arbitration proceedings."
The suit in Suffolk Superior Court alleges that AIG in connection with the Trenwick America Reinsurance Corp. filed the $73 million in allegedly inflated claims to cover losses on workers' compensation, occupational accident and industrial aid policies in 2004.
According to the complaint only $15 million in claims may be legitimate.
Stamford, Conn.-based Trenwick America Reinsurance Corp. was hired by the syndicate to assess the legitimacy of the claims. The plaintiffs allege that the company colluded with AIG in an inflated claims scam.
No Trenwick spokesman was available for comment. The carrier is currently in bankruptcy.
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