Large insurance companies typically deal with added scrutiny from the public and sometimes for very good reasons. While it’s unfortunate when individual action tarnish the reputation of a company by defrauding policyholders, the situation is much worse when an entire company takes steps to defraud. In the case of Chubb, the problem lay much more in the former.

Chubb Corporation is a publicly traded property and casualty insurer, known as the world’s largest of its kind. According to the Property Insurance Law Blog, Chubb has a “good reputation”, which have fell into disrepute after the actions of one of their adjusters.

According to the post, an adjuster – Dennis Sorge – who had been with Chubb for almost 30 years became embroiled in a trial making the claim that Sorge had been defrauding multiple clients of Chubb and the company itself.

The trial found eight specific instances where Sorge schemed with a contractor named Paul H. Mertz Jr. Apparently Mertz would submit “inflated estimates” to Chubb. The work that needed to be done was at times not covered by whatever insurance policy was in place. Mertz would shortchange Chubb and the policyholders and then split the money between himself and Sorge. These shortchanges included replacing or fixing items with refurbished ones instead of new ones, and then pocketing whatever Chubb paid him for his expenditures.

He was able to achieve this by acting as both a contractor and a consultant, a situation which was prohibited by Chubb policy. On top of all of this, Mertz was also receiving a consulting fee.

Despite this injustice, the law caught up with both men. As the trial ensued and after about 40 days, the Judge charged Mertz and Sorge with a judgment of almost $12.3 million dollars.

While things may have been balanced in the end, there’s no telling how many policyholders thought they were getting a new fixture only to find it was something of lesser value.

What do you think? Will the outcome of this be a positive thing for Chubb’s policyholders?