2004 1116 – GOV (Senate) – Oversight Hearing on Insurance Brokerage Practices, including Potential Conflicts of Interest and the Adequacy of the Current Regulatory Framework

  • 2004 1116 – GOV (Senate) – Oversight Hearing on Insurance Brokerage Practices, including Potential Conflicts of Interest and the Adequacy of the Current Regulatory Framework, CSPAN (Insurance Brokerage and Regulation Practices) – Peter Fitzgerald (R-IL)   —   [BonkNote]
    • [PDF-166p, VIDEO-CSPAN] 
    • Spitzer Investigations
    • Richard Blumenthal (as Attorney General – [D] -Connecticut, Currently (2021) Congressman from Connecticut] 
    • John Garamendi, as Insurance Commissioner California
    • Gregory Serio, Superintendent – New York State Insurance Dept.
    • Eliot Spitzer – Attorney General – New York State
    • J. Robert Hunter, Director of Insurance, Consumer Federation of America
      • Complexity produces weak regulation, Unleash the FTC, Anti-trust, Cartel rating organizations, Spitzer report – Regulators have utterly failed, 
  • :44 / :48  Garamendi ; Agent works for the company
  • :47  Peter Fitzgerald … You have to be a very careful working with Agents.  They are fiduciaries of the company not the clients.
  • :52 Gregory Serio ~”people didn’t come forward because they were embarrassed that they were schnookered”
  • :54 Spitzer –bid rigging, steering(violation of law, undisclosed compensation) …compared to Revenue Sharing with Mutual Fund industry.
  • :57 nondisclosure of revenue/ commissions / making things more complicated
  • 1:02 Brokers aren’t regulated really.
  • 1:03 Interlocking nature, Companies, reinsurance. Bermuda
  • 1:03  Blumenthal Antitrust enforcement
  • 1:04 Mccarran-Ferguson Act.  ~”probably never repeal the act..insurance lobbying strong” Does MF apply to Brokers?  “business of insurance” 
  • 1:06 big companies can get away with more shit.  “cartel behavior” higher premiums
  • 1:06 Garamendi–small companies do bid rigging and steering as well. 
  • 1:09 Garamendi– Congress
  • 1:10  FTC/ Congress/1980
  • 1:17 Fitzgerald  ; major departments in the US weren’t audited until 1999.  Billions of dollars were lost.
  • 1:23 Personal lines sector kickbacks/ additional compensation/ vacations for selling so much in / winning sales contents/
  • 1:25  agents representations very confusing…broker… fiduciary…
  • 1:26 Private lawyers are suing companies on behalf of individuals, companies, etc
  • 1:27  Spitzer-kickbacks to brokers/ agency in personal lines, loans, cash, trips, etc
  • 1:30 Sectors–Health, property casualty, employee benefits
  • 1:32 why isn’t there better regulation? Serio
  • 1:33 Serio  ..Insolvenies. .80’s/90;s.Smart Bill..
  • 1:34 Fitzgerald..1949..Illinoia Gov Dwight Green state payroll paying 32 Newpaper editors $10,000 per year. 2 Papers won pulitzerprize.. St. Louis post dispatch /chicago daily news.
  • PART 2
  • 1:55 Ernie Csiszar “cartel is true” 3 big companies.  Contingency is a misnomer
  • 2:06 Robert Hunter 1) people don’t know what they doing (even sophisticated buyers) 2)  The FTC Improvements Act of 1980 allows the FTC to study an insurance issue only upon a specific request by a majority of either the Senate or House Commerce Committees [15 USC 46(i)]. This Act also still allows the FTC to use its investigative and reporting powers to examine a minor set of insurance issues: antitrust activities not allowed under the broad antitrust exemption granted to insurers in the McCarran Ferguson Act.
    • Smart Act-bad
    • Manipulation of data is where the problem lies
    • Insurance commissioners never catch anything.  prudential a few years ago.
    • Regulatory Capture. Unleash the FTC. Repeal the Anti-trust Exemption.
    • Disclosure.  ””””””
  • 2:38 ernie — go shop around
  • 2:39