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Conn. AG probes insurer, agency relationship

Connecticut Attorney General Richard Blumenthal has issued subpoenas in an investigation of bonus commissions and other possible financial arrangements between Middlesex Mutual Assurance Co. in Middletown and H.D. Segur Inc., a large Connecticut insurance agency.

“The subpoenas are part of an ongoing investigation spurred initially by complaints within the industry and also from outside sources, customers and others,” he said. He would not provide specifics.

The investigation is part of a probe into the “kinds of illegalities and antitrust violations” that produced $500 million in restitution and fines in several states, including Connecticut, Blumenthal said.

The Hartford Courant reported that it obtained a copy of a subpoena showing the state also is asking about ownership relationships between the firms and any experience involving “sham bids” for insurance.

Both companies said they stand by their business practices and long-standing reputations, the newspaper reported. “We don’t think we’ve steered customers,” William J. Morris, a partner in Segur, said. “We run a highly ethical business. I believe that in my heart and soul.”

The agency has contingent commission agreements with various insurers as other agencies do, and the arrangements are “lawful and proper,” he said.

Blumenthal and state attorneys general in Illinois and New York have argued that “contingent commissions” may be tantamount to kickbacks. They haves have won agreements from several companies to stop contingent commissions.

According to Morris, Middlesex Mutual owns a 22.5 percent stake in Segur, does not have members on Segur’s board and does not vote or have any management control over the agency. Segur is among Connecticut’s larger insurance agencies, with more than $100 million of premiums a year.

Middlesex, which sells auto, homeowners’ and business insurance, is part of COUNTRY Insurance & Financial Services Group in Bloomington, Ill.