Spitzer gets two more scalps in insurance investigation

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The Independent Online

Eliot Spitzer, New York's attorney general, claimed more scalps yesterday in his investigation of the insurance industry, when two executives from Zurich Financial Services pleaded guilty to criminal charges over allegations of price manipulation.

Eliot Spitzer, New York's attorney general, claimed more scalps yesterday in his investigation of the insurance industry, when two executives from Zurich Financial Services pleaded guilty to criminal charges over allegations of price manipulation.

The move came as Mr Spitzer and the attorney general of Connecticut, Richard Blumenthal, gave evidence to a senate inquiry about the bid rigging and inappropriate fees Mr Spitzer highlighted in a lawsuit on 14 October against the broker Marsh & McLennan.

While Marsh is still the only company formally charged by Mr Spitzer, he named a number of insurers in the case, and is currently looking closely at whether the charges should be widened to include others.

The two Zurich employees, from its US casualty business, pleaded guilty in a court in New York after the company said last week it was suspending several employees in America.

Mr Spitzer had earlier told the Capitol Hill hearing that there was about to be an addition to the three executives, from the insurers Ace and American International Group, who had admitted to rigging insurance bids to maximise fees from clients.

Mr Spitzer used the meeting to attack the system whereby insurers are regulated at the state level, and are exempt from the federal anti-trust legislation which other companies have to adhere to.

"From our work in this area, it is clear that the federal government's hands-off policy with regard to insurance, combined with uneven state-regulation, has not entirely worked," Mr Spitzer said.

Peter Fitzgerald, the senator who chairs the financial management sub-committee, said Congress might need to act to ensure more competition. The Illinois Republican also questioned whether state regulation of insurance brokers was adequate.

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