New York Attorney General Eliot Spitzer’s style of attacking an industry and then settling for money doesn’t sit well with at least one of the country’s insurance commissioners.
Lawrence Mirel, insurance commissioner for the District of Columbia, is critical of Spitzer’s tactics even while acknowledging that the problems the New York official has uncovered need to be investigated.
Speaking before an insurance industry gathering, Mirel disagreed with sweeping charges over contingent commissions because they tend to make the public think all insurance people are “bad apples,” as well as with the practice of settling for money without getting guilty pleas from parties.
“You make strong charges against a rich industry and then sit back and wait for them to come to you and settle,” is how Mirel described Spitzer’s approach.
“Payments of large amounts of money without guilty pleas seems like piracy. I don’t like it. If they’re guilty, they should be prosecuted,” Mirel said. He termed the approach a “plaintiff’s bar” mentality.
“Who pays those fines?” he asked, answering on his own question, “Policyholders, of course.”
He said illegal activities such as bid rigging deserve to be pursued, but that there has been an overreaction to the contingent compensation contracts that are under attack.
“Spitzer has exposed areas that need to be looked at but it’s not new in the insurance industry and it’s not unique to insurance. Every company finds ways to incentivize the sale of its products,” Mirel said.
“Maybe there should be stricter rules, but that would be legislation,” he added.
Mirel spoke at the annual meeting of the insurance company trade group, the Property Casualty Insurers Association of America (PCI). His remarks on Spitzer came in response to an audience question after his prepared remarks.
A report with more on his talk at the PCI appears in the Nov. 8, 2004 issue of Insurance Journal East.
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