North Carolina state insurance regulators are investigating whether as many as 10 insurance companies conspired in a price-fixing scheme.
The Insurance Department is examining the companies after contacting about 1,400 insurance providers and 4,000 licensed brokers in the fall. The agency asked each to certify in writing that they had not engaged in bid rigging or other illegal price fixing.
“Initial results of our investigation show there is enough evidence of the possibility of this problem to warrant further work,” Insurance Commissioner Jim Long told the Wilmington Morning Star. “All we have so far are preliminary details, a few leads that need to be looked into.”
The department started its probe into price fixing in late October in the aftermath of allegations by New York Attorney General Eliot Spitzer that Marsh & McLennan, accepted commissions for illegally fixing prices to favor certain insurance providers.
Under the scheme, an insurance broker fakes or manipulates insurance bids to steer a client to a particular company, regardless of whether it offers the best price. In exchange, the insurance company gives the broker a kickback, or a “contingent commission.”
Long did not reveal the names of the companies being investigated, but may do so by the end of the week if given the legal OK.
“If we do find evidence of bid-rigging, we will take swift steps to make sure the practice ceases to take place in this state, and we will appropriately punish those guilty to our ability under the law,” Long said.
Long’s department also is crafting a legislative proposal to more clearly define the fiduciary responsibilities insurance brokers have to their clients.
Was this article valuable?
Here are more articles you may enjoy.