October 25, 2004
Oregon is joining insurance regulators in other states to look into allegations of bid-rigging, price-fixing and payoffs involving insurance brokers and insurance companies.
Among other issues, regulators are investigating charges that insurance brokers steered business to favored insurance companies through use of false bids, in order to take advantage of contingent commissions paid by those companies. If confirmed, these practices may have resulted in increased insurance costs for businesses and individuals.
"We've been concerned about issues with broker commissions for some time," Oregon Department of Consumer & Business Services Insurance Division Administrator Joel Ario said. "In fact, the Insurance Division currently has draft rules in circulation that would increase disclosure requirements to make certain that businesses and consumers are fully informed of how their broker is compensated and any conflicts of interest that may exist."
"We need to ensure that when insurance purchasers work with a broker, they can be confident that the broker is serving their best interests. We'll be reviewing those rules now to see if they need to be strengthened even further," Ario said.
Less than a week ago, New York Attorney General Eliot Spitzer filed suit against Marsh & McLennan, the nation's largest insurance brokerage, for allegedly steering business clients to insurers that paid an extra compensation. Later in the week, California's Insurance Commissioner, John Garamendi, said he was putting the insurance industry under tougher scrutiny.
