Deloitte pays $40M for Pa. carrier malpractice

Joel Ario, the Pennsylvania insurance commissioner, has finalized a $40 million settlement with Deloitte & Touche LLP. The New York-based accounting firm yesterday paid the settlement in connection with its auditing service for Philadelphia-based Reliance Insurance Co., a carrier that’s now in liquidation. The commissioner’s office had accused Deloitte of accounting and actuarial malpractice, and breach of contract in relation to its audit of Reliance. Jan A. Lommele, an actuary for Deloitte, was also a named defendant in the suit. The accounting firm admitted no wrongdoing. This latest settlement brings the state’s total recovery amount from the Reliance case to $145 million. Previously, $45 million was recovered from the Reliance parent companies, and about $60 million was recovered from legal actions against the carrier’s former officers and directors. Reliance has been in liquidation since Oct. 3, 2001, when it was declared insolvent by then-commissioner, M. Diane Koken. The carrier used to sell workers’-compensation policies as well as commercial liability and auto coverage.