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New York Insurance Regulator Clashes With Spitzer

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The office of New York Attorney General Eliot Spitzer may reevaluate its relationship with New York Insurance Superintendent Howard Mills as a result of Mills’ recent comments about Spitzer’s investigations, an office spokesman says.[@@]

Mills appeared Friday in New York, at a meeting organized by the Association of Insurance and Reinsurance Runoff Companies, to announce that the New York State Insurance Department is starting a 5-lawyer corporate practices unit. The unit will look into abuses in the insurance industry, Mills said.

Mills said at the gathering that Spitzer could have conducted his probes of commercial insurance bid-rigging and improperly documented financial transactions in a more “surgical” manner.

An investigation “does not need to be done in so public a way as to affect the stock of a public company and have 5,000 people lose their jobs,” Mills said.

Darren Dopp, a Spitzer spokesman, says Mills’ comments are a source of concern in Spitzer’s office.

Mills “is supposed to be a proponent of the highest business standards and a protector of consumers and honest companies who obey the law,” Dopp says. “Heretofore Mills has agreed to work with us, but, if this signals some kind of shift where he is taking a different view, there may be problems.”

Mills, a former 3-term Republican member of the New York state Assembly, lost in a U.S. Senate race against the incumbent, Sen. Charles Schumer, in November 2004. New York Gov. George Pataki, a Republican, appointed Mills to his current post in January.

Spitzer has announced plans to run in the New York Democratic primary for governor in 2006. If he wins the nomination, he could face Pataki in the general election.

Partisan politics “was Mills’ background when he came into office, and we wondered whether or not he could put that aside and concentrate on his responsibilities of office,” Dopp says. “We would like to give the guy the benefit of the doubt, and we don’t think you really need some in-depth experience to do a good job.”

But Dopp says the bottom line is that scandals happened on the insurance department’s watch.

“You have to accept responsibility when something like that occurs,” Dopp says. “Having said that, we always understood that they were lied to and duped.”

Dopp points to 3 settlements with insurance brokerage firms that Spitzer’s office already has negotiated as evidence of the value of the investigations.

“We think we are at a critical juncture where we are turning the corner and bringing reform to the industry,” Dopp says.

Gregory Serio, the Pataki appointee who preceded Mills as superintendent, was someone “who when the problem was revealed was eager to get to the bottom of it and had an aggressive response,” Dopp says. “Serio throughout the process said that, ‘We have to be aggressive not only for the customers but for the honest corporations out there.’”

But Dopp minimizes the effects a split with the New York insurance department would have on ongoing attorney general’s office investigations. “We always carried a tagline thanking the insurance department for their contributions, minimal though they were,” Dopp says.


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