A Senate subcommittee may hold a hearing on the broker fee controversy Nov. 16.[@@]
The Financial Management, the Budget and International Security Subcommittee, an arm of the Senate Governmental Affairs Committee, has sent invitations seeking testimony from state attorneys general, representatives for industry trade groups, the Illinois insurance commissioner and a fellow at a Washington-based conservative think tank who has been highly critical of New York Attorney General Eliot Spitzer.
The subcommittee is headed by Sen. Peter Fitzgerald, an Illinois Republican who plans to retire from Congress in January 2005.
Fitzgerald’s state is home to Aon Corp., Chicago, one of the targets of Spitzer’s investigation.
A member of the subcommittee staff confirmed that the subcommittee is organizing the hearing, but Fitzgerald’s spokesman was not available for comment.
Members of Fitzgerald’s subcommittee members include some of the ranking members of the Senate, including Republican Sens. Ted Stevens of Alaska, chairman of the Senate Appropriations Committee, and Richard Shelby of Alabama, chairman of the Senate Banking Committee. Democratic members include Sens. Carl Levin of Michigan and Frank Lautenberg of New Jersey.
Preliminary plans call for Deirdre Manna, acting Illinois insurance commissioner, to represent the National Association of Insurance Commissioners, Kansas City, Mo. Manna is a member of the working group established by the NAIC to look into the broker fee controversy. The controversy was triggered by subpoenas issued by Spitzer in April. The subpoenas called into question the legality of incentive fees paid by insurers to brokers, who are paid to represent companies to secure insurance for their businesses.
Attorney generals who might appear could include Spitzer, John Garamendi of California and Richard Blumenthal of Connecticut.
Trade groups on the invitation list include the Property Casualty Insurers Association of America, Des Plaines, Ill., and the Council of Insurance Agents and Brokers, Washington.
Some of the other invitees are Robert Hunter, director of insurance at the Consumer Federation of America, Washington, and Alan Reynolds, a fellow at the Cato Institute, Washington.
Reynolds was the author of a recent op-ed article in The Wall Street Journal that called the results of Spitzer’s investigation a “non-scandal.” Reynolds also argues in his article that, in the long run, changing the current broker compensation system will raise the fees companies pay to purchase insurance.