New York Attorney General Eliot Spitzer is scheduled to appear Tuesday at a Senate hearing on insurance brokerage practices.[@@]
The Subcommittee on Financial Management, the Budget, and International Security, an arm of the Senate Governmental Affairs Committee, expects Spitzer to discuss “potential conflicts of interest” in insurance brokerage practices and the “adequacy of the current regulatory framework.”
Spitzer says he and his staff have uncovered serious conflicts of interest in the insurance brokerage system.
Spitzer’s critics argue that the abuses Spitzer’s team has found are isolated.
Sen. Peter Fitzgerald, R-Ill., the senator who convened the hearing, is about to leave Congress. He did not run for re-election this year, and his subcommittee has no legislative jurisdiction over the insurance industry.
Because Fitzgerald is a lame duck, “no one in the insurance community is afraid that this [hearing] is going to lead to any specific federal legislative activity,” according to an insurance industry lobbyist who requested anonymity. But “giving Spitzer a forum in such a favorable environment will certainly cause further reputational damage to the industry at a particularly unwelcome time and is not likely to advance the public discourse on this issue to any degree.”
Spitzer will appear on a panel of state attorneys general.
Joining Spitzer will be Connecticut Attorney General Richard Blumenthal and New York Insurance Superintendent Gregory Serio. Serio also is representing the National Association of Insurance Commissioners, Kansas City, Mo., as a member of the Executive Task Force on insurance brokerage issues. Serio is expected to unveil a proposed model law dealing with the alleged insurance brokerage abuses.
John Garamendi, California insurance commissioner, also is scheduled to testify. He has followed up on Spitzer’s investigation by calling for greater disclosure of all fees and commissions paid to agents and brokers for selling insurance products.
A second panel will feature several industry representatives. Scheduled witnesses include officials from the Property Casualty Insurers Association of America, Des Plaines, Ill.; the Independent Insurance Agents and Brokers of America, Washington; and the Council of Insurance Agents and Brokers, Washington.
Robert Hunter, director of insurance for the Consumer Federation of America, Washington, also is scheduled to testify.