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By: Gilberto on Giovedì 21 Ottobre 2004 13:18
Poi quando leggi news come questa , ti passa la voglia di metterci dei soldi ....
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Spitzer Making Good On Plan For Wide Insurance Probe
By DINAH WISENBERG BRIN
October 19, 2004 4:35 p.m.
of DOW JONES NEWSWIRES
PHILADELPHIA -- New York Attorney General Eliot Spitzer's plan to probe the entire insurance industry appears to be bearing out amid signs that his office is examining practices associated with a variety of coverage types, including life, health and auto.
Spitzer focused on the property and casualty sector last week when he accused the world's largest insurance broker, Marsh & McLennan Cos. (MMC), of steering clients to major insurance companies that had paid it large "contingent commissions" and of soliciting rigged bids for insurance contracts.
Spitzer, a watchdog whose past probes triggered sweeping changes on Wall Street, filed a civil complaint against Marsh and named several property and casualty insurers as participants in the schemes, warning that other major insurers could face civil or criminal charges.
"The insurance industry needs to take a long, hard look at itself. 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," Spitzer said in a statement last week.
His office has repeatedly said the investigation covers the whole industry.
"We're looking at the entire spectrum of the insurance industry," Spitzer spokesman Brad Maioni said Tuesday, declining to elaborate.
Health insurers Aetna Inc. (AET) and Cigna Corp. (CI) have said they've been cooperating since Spitzer's office issued them subpoenas for information on broker compensation in June, and both companies confirmed a published report Tuesday that they have received additional subpoenas since then, also related to broker compensation.
"Aetna received a follow-on request for information in September. This subpoena is related to the initial inquiry made during the summer," spokesman David Carter said, declining further comment on the matter.
Cigna spokesman Wendell Potter said the company has received at least two subpoenas related to broker compensation as well as informal requests for information.
Meanwhile, MetLife Inc. (MET), which also received a subpoena earlier this year, said Friday it has received three additional subpoenas from Spitzer. The new subpoenas relate to broker compensation and seek information regarding whether the company is aware of the provision of "fictitious" or "inflated" bids, the company said.
MetLife, which generated about $9 billion in premiums and fees last year, said it is responding and cooperating with the probe. In a press release Tuesday, the company said that it is not aware of any instance in which it or any other company provided a fictitious quote and that it is continuing to conduct an internal review of its commission practices.
The large employee benefits company said it isn't surprising that it would be among those receiving inquiries. MetLife said it conducts business with employers directly and through brokers and consultants, and pays both base commissions and other contingent payments.
Contingent payments totaled $25 million for business sold and serviced in 2003, MetLife said, adding that third parties also may be compensated for administrative services.
Other Lines Of Insurance
The Wall Street Journal reported Tuesday that Spitzer is examining the way life, homeowners' and auto-insurance policies are sold to individuals. The New York Times said he's also investigating whether consumers are paying too much for disability and accident insurance, and quoted an investigator as saying the office is interested in "health-related" and auto lines.
Cigna, Aetna and at least some other major managed-care companies, in addition to health benefits, sell various combinations of group life, accident or disability insurance.
The Journal reported that California Insurance Commissioner John Garamendi plans to file lawsuits soon against companies that sold personal insurance, including employee benefits, life, auto and homeowners' policies. He didn't specify the companies, the newspaper said.
Several analysts published notes in recent days suggesting that the concerns Spitzer raised about property and casualty insurers are less relevant for the health insurance sector, since it operates differently.
Fulcrum Global Partners, however, said Tuesday that the risk health insurers face from Spitzer's probe appears "much more tangible than the Street has previously thought," even though the firm suspects that the kinds of abuses alleged in the property and casualty industry aren't repeated in the health insurance sector.
The firm said that a Marsh & McLennan unit, Mercer Human Resource Consulting, consults with employers on health insurance and other benefits, and speculated that Spitzer might look there next.
Fulcrum cut its rating on managed-care giant UnitedHealth Group Inc. (UNH ) to neutral from buy, voicing concern that the insurer is vulnerable to the New York probe. The firm cited a March 2003 report in which the state alleged UnitedHealthcare of New York had not filed its plan on broker commissions as required by state law; the company later filed and New York accepted a corrective plan of action, Fulcrum said, adding that UnitedHealth "is still the best-run company in the business."
Fulcrum has no investment-banking relationship with UnitedHealth. A UnitedHealth spokesman didn't immediately return a call for comment.
Stocks in the managed-care sector tumbled sharply Tuesday, as did other insurance stocks. Merrill Lynch & Co., commenting on the managed-care share weakness, said the group faces ongoing "headline risk" until the specifics of Spitzer's probe become clearer.
"Part of the problem is that we have not heard anything definitive in terms of the specific focus/scope/timing of any further action by the attorney general. Right now, this situation remains hard to define," the firm said.
In a separate report, Merrill said investors in pharmacy benefit management businesses had overreacted to concerns about Spitzer's focus on the health insurance industry.
"We have seen no evidence, or even allegations thus far, that PBMs have engaged in any activity similar to what has been alleged by Spitzer in his most recent financial probes of insurers," the firm said.
Spitzer didn't name health insurers in his civil complaint against Marsh, but alleged that a managing director in the broker's health-care group told colleagues that some insurance companies were paying Marsh under contingent commission agreements and the firm would steer business to certain insurers; it didn't specify whether those companies were health insurers.
