Attorney General Eliot Spitzer

[agencyproducer]

What do you think about Eliot Spitzer's agenda to have the insurance industry ruled and run by the Government?

While Eliot Spitzer is currently only an Attorney General, he aspires for a shot as the Governor of NY.

He has permanently ruined Marsh's reputation and is working on Aon. These are two of the world's largest insurance brokerage firms. He has also started to target the insurance companies themselves. Is he just trying to draw/gain attention and media to get him into the spot light, or is there really a bed-rigging problem so awful in our industry that the government must step-in and control the problem, and does this seem a bit communist?

Just wondering?

[FiniteReUnderwriter]

Most insurance industry professionals (both broker and company) follow both the letter and spirit of the law, but the information that has come out in the press about the bid-rigging, potential "tying" arrangements, and various forms of earnings manipulation are clearly wrong and deserve to be prosecuted. Catching the perpetrators and making them "pay" can actually be beneficial to the industry - in that it will improve overall disclosure / transparency and provide a level playing field for all to compete.

Any Attorney General (Elliot or otherwise) absolutely has the duty to uphold the laws of their respective States, and to protect their citizens. I give them credit for pursuing these actions.

But, I hope that they will not take a broad-brush approach with more levels of regulation "¦ IF it is found that only a few "bad actors" were responsible and acted with malice and intent to deceive. After all, history is replete with examples of how it is impossible to regulate human morality.

Additional regulation "of the many"?, as an approach to solve the intentional wrong-doings "of a few" only serves to add more cost and complexity to our business. In fact, as far as I can tell, all of the alleged violations and wrong-doing involve cases where regulations and laws were already on the books to proscribe such actions, but clearly they did not. It's really all about "enforcement" (which is exactly why the Attorneys General should be involved), and not about legislating more rules.

Having said that, I think there is much more to be revealed in the next several months. It is a very real problem.

I believe some of the more "exotic" transactions that were done by aggressive insurers / reinsurers over the last several years involved practices such as: hidden side-letters; executed (but non-issued) endorsements; funds-withheld structures with excessive interest rate floor guarantees (to transform loss reserve liabilities into poorly footnoted, or outright off-balance sheet contingent financial liabilities); "quid pro quo" promises on future deals / layer pricing; and multi-layered, circular reinsurance deals. Some of these examples are currently making the rounds in the trade press, and the suits filed by State (and some foreign) regulators make for very interesting reading.

Ultimately, many of these will be found to be motivated by "earnings management"?, intentional circumvention of State insurance regulation, or outright stock manipulation (or worse in some cases). It is not an entire class of business that is wrong, it is only some of the people that did wrong transactions that are to blame.

Expect to see increased scrutiny of those markets that did such deals, and the brokers who arranged them. I would not be surprised to see various allegations of Securities Laws violations as well.

[Ramon]

I don't think so my friend, that kind of firms have this practice and take out the middle and small broker. If they wrong so paid with.

[rlucky]

... I witnessed a number of the practices (from a distance) brought to light by Elliot Spitzer at Marsh. When I questioned why things were done this way, I was promptly shown the door. (Also got good "hush-money" when I consulted a lawyer about my wrongful termination.)
Everything had to go through Global Broking, and and they got additional "commissions" for placing the business, taking credit away from the real producers. The process took much longer than going direct to the companies that we already had relationships with, client specifics got screwed-up in the process so coverage often was not correct, and other problems with using Global Broking department. This is where the bid-rigging, etc took place.

I applaud Elliot Spitzer whole-heartedly. The industry, and especially the Major Players, need cleaning-up. Ethics need to be checked. These comanies get to be so big and powerful that they make thier own rules to benefit themselves only. This must be kept in check by the Elliot Spitzers of the world.
Amen!!

[mica]

This is a simple issue.

Roaches don't like the light and Spitzer is the light. The roaches are the folks who are do not follow the law and are criminals.

What Spitzer is doing is making examples of a few. Other folks will go, oh, what we are doing is wrong, and we must stop. So, he is protecting the insureds, investors of insurance companies, and their employees. This can only help the industry, promoting fair competition and pricing.

I say good job Mr. Spitzer. ...And why the heck are you the only AG with the guts to stand up for right. We need more like you!

[toknkok]

I would like to hear by email from anyone who has direct knowledge of the bid rigging and tying arrangements made at Marsh and /or Aon and their financial reporting practices. Tom O'Keefe
toknkok@aol.com

[Big Dog]

Marsh was notorious on their bid rigging.

As to Aon, except maybe in their NY office, it wasn't an issue.

I'll bet your an attorney looking to cash in with a lawsuit. From what I remember, Marsh and Aon have both settled with the respective state AG's and any legal actions with regards to bid rigging have been addressed with settlement funds being established.

[INTLXS]

Do some searches on the internet.... the actual documents (copies of e-mails) were part of the lawsuit and were posted on the internet for all to view.