Blumenthal Asks Elective Insurance Commissioner

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By Steve Tuckey

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NU Online News Service, Feb. 10 1:32 p.m.EDT?An insurers trade group reacted with skepticism todayto a call by Connecticut Attorney General Richard Blumenthal tomake the insurance commissioner's post elective.[@@]

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The attorney general proposed a constitutional amendment tochange the insurance commissioner's current appointive status, aswell as a legislative change to require greater disclosure bybrokers and agents as to their fiduciary duty to consumers, similarto real estate agents.

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Mr. Blumenthal has been second only to his New York counterpart,Eliot Spitzer, in conducting a high profile investigation ofinsurance broker compensation issues.

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"Tougher rules are necessary, but not enough," Mr. Blumenthalsaid. "We need better enforcement. An elected commissioneraccountable directly to the people can fight abuses that raiseinsurance costs for everyone."

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But American Insurance Association vice president Paul Morandisagreed.

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"Regulators can provide the best protection for consumers, andenforcement in the marketplace, if they have expertise in insurancematters, rather than the ability to win an election," Mr. Moransaid.

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Regulators' responsibilities in the area of solvency also do notlend themselves to making the commissioner an electiveposition.

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Under Mr. Blumenthal's proposal, insurance agents would berequired to disclose in writing whether they are acting on behalfof the insurer. Brokers and agents would also be required todisclose the details of all quotes from insurers, and the reasonsfor the broker's recommendations.

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In addition, a consumer would have the option to be a broker'ssole source of compensation for any business on behalf of thatconsumer.

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Earlier this month Mr. Blumenthal filed suit against theBermuda-based ACE Ltd. alleging the company paid kickbacks tosecure a state workers' compensation contract. Last month he suedMarsh & McLennan and a unit of ACE for illegal commissions inregard to an $80 million state contract.

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