Connecticut Joins Broker Investigation

Mr. Blumenthal's investigation began at around the same time New York and California began their own investigations. He said he has been in touch with investigators in those states on the issue, according to a report in The New York Times.

Mr. Blumenthal did not return a request from National Underwriter for an interview.

A spokesperson for the Connecticut Department of Insurance said Insurance Commissioner Susan Cogswell would be meeting with Mr. Blumenthal later this week to discuss his concerns over contingency fees. No additional comment would be available until after the meeting, she said.

The investigation coincides with inquiries in New York and California, where a combination of government subpoenas and civil lawsuits are attacking the controversial fees.

In New York, State Attorney General Eliot Spitzer subpoenaed records of Marsh, Aon, Willis and Kaye Group, a subsidiary of Hub International, related to contingency fees. In California, the insurance department said it is looking into the practice.

The brokers said they are cooperating in the investigations.

Contingency fees are paid by insurers to brokers on the performance of their book of business. The practice, critics say, can lead brokers to steer business to the company paying the best fees and not because it offers the best deal to the insured.

An informal survey released this week by Advisen, Ltd., of 330 risk managers found that 56 percent of those surveyed do not adequately disclose contingent commissions (also known as placement service agreements) and 69 percent said that the fees represented a conflict of interest. Less than twenty percent said they received adequate disclosure.

In California a public interest lawsuit accuses some major insurers of paying "bribes and kickbacks" to small brokers in order to get their business. The attorney, Finley Harckham, a partner in the New York law firm of Anderson Kill & Olick, said he has been contacted by some regulators concerning the suits, which include Allianz, American International Group, Chubb, the Hartford, and others as defendants. It was also recently announced by Chubb that it has received a subpoena from the New York AG's office in the case.