Florida Sets Unit To Probe Insurance Brokers

Florida Sets Unit To Probe Insurance Brokers

NU Online News Service, Nov. 4, 4:29 p.m. EST? Florida has created a legal task force to investigate whether brokers and insurers in the state have been involved with bid-rigging, kickbacks and improper fees, the state's top insurance regulator said today.

The announcement came from Florida's Chief Financial Officer Tom Gallagher, who said the unit would see if Florida firms are engage in any of the activities outlined in New York Attorney General Elliot Spitzer's civil suit against Marsh & McLennan Companies and its brokerage unit Marsh Inc.

Mr. Spitzer as part of an ongoing investigation has alleged in his suit that Marsh took payoffs from major insurers it steered unwitting customers to after inflating prices through bid-rigging. Three persons have pled guilty to criminal charges in the case.

"If brokers and insurance companies are manipulating the law for personal gain and driving up insurance costs for consumers, then we need to seek restitution where appropriate and take swift action to prevent further abuses," said Mr. Gallagher, who oversees the Florida Department of Financial Services.

Don Dowdell, the department's Deputy General Counsel, will chair the task force, and work with a team of lawyers and investigative staff to scrutinize insurance broker and company sales practices. Mr. Gallagher has also asked Steve Burgess, Florida's Insurance Consumer Advocate, to serve on the task force.

Mr. Gallagher said he is also directing the task force to determine if legislative action is needed to require transparency in insurance company transactions and agreements to prevent abusive practices and protect the insurance-buying public.

His announcement today expands on a department spokesperson's statement to the National Underwriter yesterday that the department was investigating.

In addition to Florida and New York, the issue of broker fees is also being looked at by California, Connecticut, Ohio and New Jersey.