Illinois Insurance Dept. Issues 250-Plus Subpoenas

By Mark E. Ruquet

NU Online News Service, Nov. 19, 12:26 p.m.EST?Illinois insurance regulators investigating brokerfees have tagged 250 firms with subpoenas, which they expect to bereturned this week, an official said.[@@]

The massive number of subpoenas was churned out by the Divisionof Insurance within the Illinois' Department of Financial andProfessional Regulation (IDFPR).

Their requests for information went to 250 of the state'sinsurers and largest brokers, most seeking information on theirbusiness and disclosure practices, said Susan Hofer spokeswoman forthe IDFPR.

Illinois law requires a level of disclosure on compensation andthe subpoenas are reviewing that compliance, she said. Thedepartment's action, she added, is only extraordinary in the numberof subpoenas issued.

The department's action, she said, was influenced by theinvestigation begun in New York by the state's attorney general,Eliot Spitzer. She declined to say if the department also acted onindications of illegality similar to what Mr. Spitzer said he foundin New York.

The New York attorney general on Oct. 14 sued New York-basedcommercial broker Marsh Inc. for violation of the state's antitrustlaw, accusing the company of rigging and inflating bids with biginsurers it steered business to in exchange for payoffs disguisedas fees and commissions.

A suit against San Diego employee health benefits brokerUniversal Life Resources has also been filed accusing the companyof improperly steering business to major insurers.

The Illinois subpoenas were issued Nov. 5 and responses areexpected to be in this week, Ms. Hofer said.

In addition to filing suits, the New York attorney general hasaccepted guilty pleas from five insurance executives at Ace Ltd.,American International and Zurich American Insurance Company. Ashis probe of the industry has continued, other investigations havesprouted throughout the nation by insurance regulators and stateattorneys general. Eleven states are now involved.

As part of its investigation, IDFPR has established an800-number telephone hot-line for consumers to report allegationsof abuse.

Ms. Hofer said that while the insurance division has a broadrange of powers in the regulation of insurance, it regularly passesalong any "questionable" findings to the state attorneygeneral.

Illinois Attorney General Lisa Madigan's office is lookingclosely at the contingency fee issue, said Ben Weinberg, chief ofthe Public Interest Division, which includes its antitrust bureau.He said the department is speaking to Mr. Spitzer's office andother attorneys general and working with the state's insurancedivision on the investigation.

Mr. Weinberg indicated that the attorney general may beannouncing some action in the future.