Mich. Begins Broker Fee Probe
By Mark E. Ruquet
NU Online News Service, Dec. 29, 1:01 p.m. EST?Michigan's insurance regulator has begun an investigation of brokerage compensation, joining the growing number of states probing insurance industry practices led by Eliot Spitzer, New York's attorney general.[@@]
Commissioner Linda A. Watters, who heads up Michigan's Office of Financial and Insurance Services, said her office will participate in the National Association of Insurance Commissioners investigation of broker compensation agreements by requesting information from insurers in the state.
The action comes after Mr. Spitzer's suit back in October against Marsh & McLennan Companies charging that the New York-based services firm's insurance brokerage subsidiary, Marsh, engaged in bid-rigging and steering of insurance contracts to insurers in return for profitable contingent fee commissions tied to volume placements.
"Insurance buyers deserve to know that they aren't being scammed," said Ms. Watters in a statement. "Serious allegations regarding bid-rigging in New York compel further investigation here in Michigan."
The four-page questionnaire asks insurers 17 questions about their relationship with brokers and the character of the business with them. Insurers that do not do brokerage business in the state, and only work through appointed agents, must attest to that fact and do not need to proceed further with the questionnaire.
The commissioner's office noted that most insurance business conducted within the state is done by appointed agents, who are not the subject of the investigation.
Insurers must complete and return the questionnaire by Jan. 17.
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