N.Y. ?Brokergate' Hearing Postponed

N.Y. ?Brokergate' Hearing Postponed

By Daniel Hays

NU Online News Service, Dec. 3, 3 :28 p.m. EST?A New York Assemblyman's plan to convene a hearing Monday on what he called the "ongoing broker compensation scandal" has been put on hold.

The Assembly Insurance Committee, which had planned to meet in New York City and hear testimony from New York Attorney General Eliot Spitzer and other witnesses, was postponed after legislative leaders called a special session of both the Senate and Assembly for Monday.

A date to reschedule the hearing proceedings has yet to be set, said Chris Olli, associate director of the committee and an aide to its chairman, Assemblyman Alexander Grannis, D-Manhattan.

One source said the new date would depend on Mr. Spitzer's availability.

Mr. Grannis' announcement that he planned to hold a "Brokergate" hearing, calling industry members and representatives from the agent, broker and insurer communities as well as Insurance Superintendent Gregory V. Serio, had rattled some insurance trade groups.

The assemblyman's notice of the hearing had stated it was being held to investigate the oversight of insurance licensees and determine the need for enforcement and legislative remedies.

His purpose, Mr. Grannis notice said, was "restore integrity to insurance markets that have been shaken to their core by the widespread fraud and corrupt practices revealed in ongoing investigations by New York State Attorney General Eliot Spitzer."

Reacting to Mr. Grannis reference to "widespread fraud and corruption," Bernard Bourdeau, president of the New York Insurance Association, said in a statement, "Use of these terms is hyperbole."

His announcement urged legislators not respond with some "knee-jerk public policy reaction" to allegations of improper business practices by brokers, agents and insurers "that could inadvertently disrupt the insurance marketplace."

He said today that the Monday date Mr. Grannis had set for the hearing was surprising in the first place since it was known the Senate would be in session on that date. "Why would he do that?"

Mary Christiano, director of communications for the Professional Insurance Agents of New York state said her group learned yesterday the legislative session would be held in Albany and "we were kind of wondering what would be happening" with the hearing.

PIANY was prepared to testify that bid-rigging and anticompetitive practices, which Mr. Spitzer has outlined in a lawsuit against Marsh brokerage and its parent Marsh and McLennan Companies, "represent isolated and unusual cases."

PIANY said that the irregularities Mr. Grannis was looking at "are not practiced by Main Street professionals and said "enactment of additional laws would be redundant."

Mr. Grannis notice said he wanted to hear witnesses' views about penalties to deter misconduct, and legislation to prohibit contingency payments from insurers to brokers.

Property Casualty Insurers Association of America based in Des Plaines, Ill. said they were prepared to testify that the misdeeds uncovered by Mr. Spitzer were limited to a "scant few in the industry" and the PCI does not "believe that it represents a significant failure in the regulatory system."

PCI said it opposes "overreaching or burdensome proposals that fail to deliver any real value to consumers. Public policy makers should not attempt to impose blanket prohibitions on incentive compensation programs. The terms and conditions of such agreements are best left to the private parties engaged in the contracts."

Published reports have said the Republican-controlled Senate and Democrat-controlled Assembly are meeting for possible action to override Republican Gov. George Pataki's vetoes of a state budge measure and other spending bills.