20 March 2006

Insurance Industry Needs Its Own Insurance

Last night I read a news article about this:

Zurich American Insurance Co. has agreed to pay $171 million in a deal with nine states to settle allegations of bid-rigging and price-fixing in the commercial insurance market, state officials said Sunday.

I was tired and went to bed. This morning out of curiosity I did a web search for “bid rigging insurance.”

Good God, people! If anyone needs insurance, it’s the insurance companies:

Marsh & McLennan Cos., the world's biggest insurance broker, cheated corporate clients by rigging bids and collecting huge fees from major insurance companies for throwing business their way, according to allegations made by New York Attorney General Eliot Spitzer.

The civil complaint filed by Mr. Spitzer against Marsh in state supreme court in Manhattan names insurance companies American International Group Inc., Ace Ltd., Hartford Financial Services Group Inc. and Munich-American Risk Partners as participants with Marsh in paying improper fees and bid rigging.

And in Florida:

Florida Attorney General Charlie Crist has issued subpoenas to 11 insurance companies as part of an ongoing investigation into the business practices of the insurance industry.

Crist's office is looking into whether members of the industry "placed their wallets ahead of the interest of their clients.”

And in North Carolina:

…an active investigation is now taking place of as many as 10 insurance companies suspected to have conspired in price-fixing.

Many other states opened investigations based on Eliot Spitzer’s initial investigation and findings, including Ohio:

[Ohio Dept. of Insurance Director Ann] Womer Benjamin declined to say how many brokers or insurance companies in Ohio may be violating state laws against deceptive or unfair business practices.

"We've gathered a lot of information, and we've found enough things to keep digging,'' Womer Benjamin said.

And a final word from the man:

"The insurance industry needs to take a long, hard look at itself," Mr. Spitzer said. "If the practices identified in our suit are as widespread as they appear to be, then the industry's fundamental business model needs major corrective action and reform."

And if you happen to be insurance shopping, the Fight Bad Faith Insurance Companies site might be helpful.


Wes said...

I have often said that it is criminal that we cannot have health care in this country without a parasitic middleman jacking up the prices.

Looks like this is just another example of the insurance industry being itself.

(whose brother sold insurance for several years; agents can be good people, but insurance execs - like just about every single corporate exec - are usually soul-sucking scum)

Michelle said...

Speaking as a person who worked in insurance for 10 years, I can tell you it is a dirty business and you are so right that insurance companies are the ones who need insurance because when they get sued, it's for a lot of money.