MIMAI (Bloomberg) ? American International Group Inc., the world's largest insurer, will refund $13.7 million in premiums after Florida's insurance regulator accused it of overcharging to cover acts of terrorism.

Most of the refunds will go to customers with workers compensation policies, Florida Insurance Commissioner Kevin McCarty said in a statement yesterday. New York-based AIG also will pay $300,000 to cover costs and fees incurred by McCarty's office.

The settlement resolves a dispute with the state that began in 2003, when AIG sought permission to raise rates over McCarty's objections. Under Florida law, insurers can charge what they want while rate applications are being reviewed.

"We are pleased to bring this matter to a conclusion with the Florida commissioner," said Chris Winans, a spokesman for AIG. He declined to comment further.

The company's shares rose 48 cents, or 0.7 percent, to $66.48 in New York Stock Exchange composite trading. The stock has fallen 2.6 percent this year, compared with the 3.1 percent advance in the KBW Insurance Index.