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November 17, 2004 at 07:00 PM
Blumenthal: Probe Growing In Size And Scope
Washington
Connecticut Attorney General Richard Blumenthal told a Senate subcommittee last week that his investigation into wrongdoing in the insurance brokerage industry, primarily dealing with the life and health industry, has “expanded significantly in size and scopeand continues to broaden and escalate.”
Even though the investigation is in its early stages, Blumenthal said, “We have seen evidence of illegal and improper anti-consumer conduct, ranging from bid-rigging to fraudulent, concealed commissions and secret payoffs to flagrant conflicts of interestall stifling competition and inflating insurance costs to consumers.”
Blumenthal said that preempting state insurance regulation as a means of dealing with the industrys problems is inappropriate. “Rather than rely on federal regulation, state insurance laws should be reinvigorated and reinventedmade robust and real agents of reform.”
Blumenthal said these laws “should establish an unequivocal, explicit fiduciary duty between the insurance broker and the consumer, require clear and conspicuous disclosure of fees and duties owed to consumers, enable consumers to pay for broker advice that is truly independent of insurance company compensation, and mandate transparent bid systems according consumers informed choices free from insurance company influence.”
Alluding to testimony by California Insurance Commissioner John Garamendi, Blumenthal said he was “encouraged” by the “active interest of other states, which we are enlisting and organizing into a strong multi-state response to these serious and disturbing improprieties.”
