Illinois Insurance Dept. Issues 250-Plus Subpoenas
By Mark E. Ruquet
NU Online News Service, Nov. 19, 12:26 p.m. EST?Illinois insurance regulators investigating broker fees have tagged 250 firms with subpoenas, which they expect to be returned this week, an official said.[@@]
The massive number of subpoenas was churned out by the Division of Insurance within the Illinois' Department of Financial and Professional Regulation (IDFPR).
Their requests for information went to 250 of the state's insurers and largest brokers, most seeking information on their business and disclosure practices, said Susan Hofer spokeswoman for the IDFPR.
Illinois law requires a level of disclosure on compensation and the subpoenas are reviewing that compliance, she said. The department's action, she added, is only extraordinary in the number of subpoenas issued.
The department's action, she said, was influenced by the investigation begun in New York by the state's attorney general, Eliot Spitzer. She declined to say if the department also acted on indications of illegality similar to what Mr. Spitzer said he found in New York.
The New York attorney general on Oct. 14 sued New York-based commercial broker Marsh Inc. for violation of the state's antitrust law, accusing the company of rigging and inflating bids with big insurers it steered business to in exchange for payoffs disguised as fees and commissions.
A suit against San Diego employee health benefits broker Universal Life Resources has also been filed accusing the company of improperly steering business to major insurers.
The Illinois subpoenas were issued Nov. 5 and responses are expected to be in this week, Ms. Hofer said.
In addition to filing suits, the New York attorney general has accepted guilty pleas from five insurance executives at Ace Ltd., American International and Zurich American Insurance Company. As his probe of the industry has continued, other investigations have sprouted throughout the nation by insurance regulators and state attorneys general. Eleven states are now involved.
As part of its investigation, IDFPR has established an 800-number telephone hot-line for consumers to report allegations of abuse.
Ms. Hofer said that while the insurance division has a broad range of powers in the regulation of insurance, it regularly passes along any "questionable" findings to the state attorney general.
Illinois Attorney General Lisa Madigan's office is looking closely at the contingency fee issue, said Ben Weinberg, chief of the Public Interest Division, which includes its antitrust bureau. He said the department is speaking to Mr. Spitzer's office and other attorneys general and working with the state's insurance division on the investigation.
Mr. Weinberg indicated that the attorney general may be announcing some action in the future.
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