Eliot Spitzer is going after the insurance giants in his widening probe of whether incentive fees paid to brokers corrupt the system.
Insurance companies Aetna, MetLife and Cigna said yesterday they’re the latest targets to get subpoenas.
Spitzer’s office is trying to untangle some of the hidden fee structures used by brokers in promoting policies and products of certain insurers.
Spitzer’s biggest complaint in his public speeches is that U.S. business culture suffers too often from “the lack of boundaries,” with rich, runaway industries fostering unscrupulous and even illegal ways of doing deals.
Still riding high from his recent victories on Wall Street reforms, Spitzer is trying to uncover whether fees that insurers pay to brokers can lead to corruption, conflicts of interest and consumer harm.
Among other insurance companies and brokerages hit with subpoenas in recent weeks are: Hartford Financial Services, Chubb, Marsh & McLennan, Aon and Willis Group Holdings.
Spitzer took up the case after his office got an independent report early this year on the questionable aspects of the insurance industry’s traditional business practices.
A public advocacy group, the Washington Legal Foundation, reported to Spitzer that the fee structure might compromise brokers’ fiduciary duties to their clients.
Aon, a major brokerage, has disclosed that it collected about $200 million in fees from insurers last year, or about 3.5 percent of all its brokerage revenue.
Aetna spokesman David Carter and MetLife spokesman Christopher Breslin said their companies would cooperate fully with the inquiry. Cigna spokesman Wendell Potter said his company also would cooperate.
Spitzer wouldn’t comment on the probe.
Connecticut Attorney General Richard Blumenthal is conducting a parallel investigation on the insurance brokerage fee system for brokers.
The Securities and Exchange Commission is also looking at insurance, in the area of investment products such as mutual funds and variable annuities sold by Hartford Financial. Variable annuities are tax-deferred retirement savings contracts that allow customers to invest money in the mutual funds and also receive insurance benefits.
Policy police
New York Attorney General Eliot Spitzer is going after the insurance industry over the incentive fees big firms pay independent brokers. Among those subpoenaed in the probe:
* MetLife Inc.
* Hartford Financial Services Group
* Aetna Inc.
* Cigna Corp.
* Chubb Corp.
* Aon Corp.
* Willis Group Holdings
* Marsh & McClennan Cos.