NU Online News Service, Oct. 21, 2004, 1:45 p.m. EDT
Standard & Poor’s Ratings Services says it doesn’t plan to take rating actions on any life and health insurance companies as a result of the recent investigations by the New York State Attorney General.[@@]
6 U.S. group life and health insurers rated by Standard & Poor’s, New York, have disclosed that they have been subpoenaed by the New York State Attorney General’s office seeking information on compensation arrangements between brokers and insurers.
The companies are MetLife Inc., New York, the largest U.S. group life insurer; UnumProvident Corp., Chattanooga, Tenn., the largest U.S. disability insurer; Aetna Inc., Hartford and CIGNA Corp., Philadelphia, two of the largest healthcare companies; Hartford Financial Services Group Inc.; and the U.S. operations of ING Group N.V., the Netherlands.
S&P notes that the formal complaint relates to bid rigging for commercial property-casualty insurance and that no such complaint has been made so far against any life and health companies. But New York State Attorney General Eliot Spitzer is investigating business practices of many of the largest group life and health insurers, S&P points out.
Spitzer is looking into contingent payments and placement fees, which S&P believes is less prevalent in life and health than in property-casualty insurance.
“In addition, for many of the largest companies in the life and health sectors, a diversified product and related revenue mix allay concerns about reliance on one avenue of distribution and income source,” S&P observes..
Other states’ regulators, including those in California and Connecticut, have launched their own investigations into broker compensation practices.