Connecticut Attorney General Richard Blumenthal said Saturday he has issued subpoenas as he investigates insurance broker commissions and other arrangements between an insurer and a broker in Connecticut.
Blumenthal said he is investigating bonus commissions and other possible financial arrangements between Middlesex Mutual Assurance Co. in Middletown and H.D. Segur Inc., a 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 in an interview.
He would not provide specifics about the complaints.
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 on Saturday first reported the attorney general’s investigation.
The Courant reported that it obtained a copy of a subpoena showing the state also is asking the companies about ownership relationships between the firms and any experience involving “sham bids” for insurance bid-rigging.
Both companies said Friday 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 Friday. “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” paid to brokers and agents to steer business to insurance companies may be tantamount to kickbacks that unfairly increase the prices paid by insurance clients.
State officials have won agreements from several companies to stop paying contingent commissions to steer business.
Middlesex Mutual owns a 22.5 percent stake in Segur, Morris said. Middlesex does not have members on Segur’s board and does not vote or have any management control over the agency, he said.
Segur is among Connecticut’s larger insurance agencies, with more than $100 million of premiums a year and 70 to 75 employees, Morris said.
Middlesex, which sells auto, homeowners’ and business insurance, is part of COUNTRY Insurance & Financial Services Group in Bloomington, Ill.
A message was left Saturday seeking comment from Middlesex.
Information from: The Hartford Courant, http://www.courant.com
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