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October 27, 2004 at 08:00 PM
Ripples from the broker fee investigation are spreading
By Jim Connolly
A number of state attorneys general are continuing their investigation of the life and health insurance industry even as a class action RICO suit was filed in U.S. District Court and the California insurance department said it might file its own civil suits in the very near future.
In Connecticut, Attorney General Richard Blumenthals list of subpoenaed insurers grew to 35 companies, including Anthem, Indianapolis. Blumenthal said in a recent interview with National Underwriter that letters of inquiry were issued in July and subpoenas were issued in mid-October to property-casualty, health, auto and employee benefits insurers. Blumenthal had declined to say what action, if any, would be taken.
The subpoena was sent to Anthem on October 25 and includes “standard questions on commission and bonus structure,” according to James Kappel, an Anthem spokesman.
California Attorney General Bill Lockyers office continues a “preliminary” internal look at brokerage practices within the insurance industry, says Tom Dresslar, a spokesman for Lockyers office. An internal team of lawyers are looking at issues including broker payments and bid-rigging, he adds.
Dresslar says the attorney generals team includes lawyers in the following areas: antitrust, securities fraud, special crimes unit, and the section representative for the California insurance commissioner.
“It is premature to say there is a formal investigation at this point. It is at a preliminary stage. We want to see what role, if any, we will play,” says Dresslar.
A decision should be made fairly soon, he adds. “We do not want to tarry too long.”
The attorney general is working with California Insurance Commissioner John Garamendi, he adds.
The insurance department is still investigating the matter, says department spokesman Norman Williams. Civil suits could be filed in the “very near future,” according to Williams.
In New York, Attorney General Eliot Spitzer, who initiated an investigation that swept in companies including American International Group, New York; Ace, Hamilton, Bermuda; and, insurance broker Marsh & McLennan, New York, issued a statement on action by the Marsh board of directors that led to the resignation of Jeffrey Greenberg, Marshs CEO, on Oct. 25.
