Southampton, Bermuda--New York Insurance Superintendent Howard Mills, in an apparent jab at New York Attorney General Eliot Spitzer, told an insurance industry conference yesterday he has formed a unit to examine corporate practices without "politics."

The Republican appointee, speaking at the World Insurance Forum in Bermuda, said insurers should welcome having an insurance regulator "looking at these issues and handling them, [rather] than an attorney general, where politics can enter into the mix."

Mr. Spitzer--an elected Democrat whose investigations of insurers and brokers has secured billions in settlement monies after probes into commercial insurance bid-rigging, contingency fee kickbacks, steering and phony accounting of reinsurance deals--is seeking his party's nomination for governor.

Earlier this month, his activity was labeled political by Maurice Greenberg, the former chairman of American International Group, who is a defendant in a civil fraud action brought by Mr. Spitzer. When his company agreed to pay $1.64 billion to settle the case, Mr. Greenberg said through a spokesman that "shareholders lose when companies choose to settle investigations motivated by political ambition, fueled by threats and settled out of fear."

Mr. Mills, outlining the reorganization of his agency during a panel discussion here, assured his audience he is not trying to construct another roadblock for insurers with his latest initiative.

The superintendent described his activity as a move to take back a part of the department's job that was usurped by Mr. Spitzer over the past few years. The industry, he remarked, should prefer to have insurance regulators perform such investigations in a manner that would remove them from the political arena.

Describing New York's latest housekeeping initiative, he related that he is often asked, "Who is, in fact, the regulator" in New York. Mr. Mills said he has been trying to "reclaim the role of regulator" during his year on the job.

Mr. Spitzer's probes of the industry were commenced while the insurance department was managed by Mr. Mills' predecessor, Gregory Serio, who had also been appointed by Republican Gov. George Pataki.

"It's fair to say that Attorney General Spitzer had jumped into [a] breach" in the system, with his investigations of brokers and finite reinsurance transactions, he said.

"There were some bad things going on," he said, adding that the department needed to change internally to pick up these things. He explained that unlike Mr. Spitzer's office, the department previously did not have resources to conduct investigations, such as attorneys with financial transaction investigatory experience.

Attorneys at the insurance department are civil servants, he said. "We don't have the ability to lock them in a room and [let them go] through boxes and boxes of files" like the attorney general does.

In addition, during insurance department examinations of companies in New York, "we're looking at data that is five years old," not in "real time" like the attorney general's office was.

To rectify these problems, the department has set up a corporate practices unit that's "up and running," staffed with attorneys that have experience in reviewing complex financial transactions. They will work with department examiners, he said.

Mr. Mills stressed that the department is not "trying to come up with another 'gotcha'-type of agency [that will] zealously look for wrongdoing," adding that the industry should welcome having an insurance regulator examining such issues instead of an attorney general, where politics could become involved.

Mr. Mills said that when Marsh & McLennan Companies were investigated by the attorney general, it had become a public spectacle, with mainstream media erroneously equating bid-rigging with contingent commissions and the entire industry given a black eye. Such investigations, he said, should be performed "surgically [and] not in a public fashion."

"If criminal wrongdoing is found, we'll work with the attorney general. That's the way it should work," he said.

A spokesman for Mr. Spitzer, Darren Dopp, said by e-mail that he had no comment on Mr. Mills' remarks.

Speaking about more global regulatory issues, Mr. Mills suggested that the politics of the U.S. system, in which 16 commissioners are elected, would be a stumbling block to the international system of mutual recognition.

At several sessions during the World Insurance Forum this week, insurance industry executives bemoaned the roadblocks and costs of the U.S. system of regulation by 50 states, pointing to better models being adopted by Europeans in which each country accepts the regulatory authority of a home state regulator.

Mr. Mills, participating on a separate panel of regulators, said he also thinks an international system of mutual recognition works best for a global economy. But before even getting to the point of being able to join their voices to the debate on global regulatory standards introduced by an earlier panel, Mr. Mills said U.S. regulators have to get their house in order.

"Before I could even hope to touch upon what [others are] trying to address about what's possible globally, I need to address what's possible at home in the states," he said, noting that states have to move to a system of greater uniformity.

He also said that while he's no fan of creating a federal entity to regulate insurance, he hasn't raised his voice in opposition to the proposed SMART (State Modernization and Regulatory Transparency) Act, the proposed House legislation to create regulatory uniformity.

"I do feel that it's very, very good that the Congress is out there with that Sword of Damocles over the U.S. state-based regulatory system, because that will move the states to a better job of uniformity and standardization. Only when we've addressed those issues can we move toward [dealing with] international issues."

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Mills, Suggests Spitzer Action Too 'Political'

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