None of those political windbags will do any more than the curent chain rattling. GJ has more power than those you quote..Mercury has been at the forefront of discloser. I always have to ask myself, if these folks like Harvey and yourself are so smart, why not start your own company or agency. It must be hard being so perfect with no way to prove it except writing on the MCY Yahoo forums. Prove to all of us once and for all that you can do it better...come on, start your own company.
California is not the Midwest
Oct 29, 2004
by DON THOMPSON, Associated Press Writer
California joins in nationwide insurance probe
SACRAMENTO (AP) -- California's attorney general on Friday joined other states' top prosecutors in beginning a formal investigation into alleged antitrust violations, price fixing and fraud by insurance companies and brokers.
Attorney General Bill Lockyer said investigators will first examine possible bid-rigging and other alleged anticompetitive behavior.
The announcement follows an investigation launched earlier this month by New York Attorney General Eliot Spitzer, which has since widened to include other states and a broadening number of insurance companies.
"Businesses cannot conspire to give themselves an unfair advantage over competitors or harm consumers by keeping prices artificially inflated. They cannot breach their duty to tell customers the whole truth," Lockyer said in his announcement.
Spitzer initially filed suit against Marsh & McLennan, accusing the insurer of rigging bids and using incentive fees to manipulate the sales of corporate property and casualty policies, driving up business' insurance costs.
Lockyer said he's looking into allegations that companies failed to adequately disclose that they were paying incentives to brokers, and that they placed "phony bids" so businesses would think they were paying a reasonable price.
State Insurance Commissioner John Garamendi has been investigating the brokers' contingency payments, and Lockyer said his investigators will work with insurance regulators on those allegations. Garamendi has said he will sue to end the practice of accepting such payments without disclosing the incentives to clients.
Lockyer also is creating a whistle-blower hot line and e-mail address that he hopes will encourage insurance companies' employees and clients to relay information about wrongdoing.
Garamendi and other regulators and prosecutors also are beginning to examine personal insurance such as life, auto and homeowners' policies.
"The trickle-down impact is the consumer ends up paying the cost of these kickbacks or whatever," said Harvey Rosenfield, president of The Foundation for Taxpayer and Consumer Rights.
"I think for a variety of reasons the insurance industry is about to receive the kind of scrutiny they have not received in 40 years," Rosenfield said. "I think the tip of the iceberg hasn't even been discovered yet."
His organization on Friday sued Novato-based Firemans Fund Insurance Co., alleging the firm is giving its agents financial incentives to dissuade them from giving 20 percent "good driver" discounts to qualified drivers. That would be a violation of California's Proposition 103, a 1988 insurance reform initiative that Rosenfield authored.
The suit, filed in San Francisco Superior Court, alleges that Firemans Fund created "target markets," and pays incentives to agents that discourage them from submitting insurance applications from drivers who don't live within the "target markets." Rosenfield said the suit is based on a whistle-blower's allegations.
Fireman's spokesman John Kozero said he hadn't seen the complaint, and the company has a policy of not commenting on a pending lawsuit.
On the Net:
Attorney General's Web site: www.ag.ca.gov
Memo to Marsh & McLennan: Eliot Spitzer is so your daddy.
The insurance giant was plunged into crisis yet again yesterday as Spitzer, New York's attorney general, charged the company with fraud and bribery that could total billions of dollars.
Marsh was only just recovering from the battering that Spitzer gave it a year ago over the market-timing scandal at its fund management arm Putnam Investments.
Its stock crashed an astonishing 26 percent yesterday, falling $11.98 to $34.15.
Spitzer says Marsh, the world's largest insurance broker, took bribes from insurers to steer its corporate clients their way.
The sums involved could total billions of dollars. School districts, municipalities, and small- and medium-sized companies were among those ripped off by the deals, he said.
And, in an astonishing development that sparked the market panic, he fingered Marsh as the ringleaderthat organized an industrywide racket of faked and inflated quotes to overcharge customers.
``These charges go to the heart of Marsh's and the industry's business model,'' Spitzer told a press conference. ``There was a craven disregard for ethics and the law at some of our nation's largest companies.''
Others accused include insurers AIG, Ace Insurance, The Hartford, and Munich American Risk Partners.
AIG's chairman is Maurice Greenberg. Marsh is run by his son Jeffrey, Ace by his other son Evan.
The alleged price-fixing went back years, Spitzer said. He claimed Marsh made $800 million from suspect ``contingent commissions'' in 2003 alone.
The irony: it was banner profits in the insurance business that helped the firm weather the devastating downturn at Putnam following the market-timing scandal.
Two former executives at AIG will testify against Marsh. Karen Radke and Jean-Baptist Tateossian pleaded guilty in New York yesterday to federal charges of scheming to defraud, and could face up to four years in jail.
After a nine-month probe, Spitzer also produced e-mails and internal memos to support his case.
In one, from 2001, a regional manager at Munich said company behavior came ``awfully close to collusion or price-fixing.''
Marsh said it is cooperating fully with Spitzer's office and has launched a high-level internal investigation. ``We are committed to getting all the facts, determining any incidence of improper behavior, and dealing appropriately with any wrongdoing,'' it said.
Nonetheless, the company came close to claiming it was being shanghaied. ``We have been cooperating with the Attorney General's investigation since it began in the spring, but have not been made aware of the charges until now,'' it said.
The other firms accused also say they are cooperating fully with Spitzer's investigation.
The broker fee thing was settled some time ago on appeal, in Mercury's favor. Our agency did charge one and stopped it for a while until the appeal went through. We never charged more than $50 unless a person had to be rewritten over and over and over again.
I wonder how many ethical agents are out there who don't misplace individuals into higher rated tiers.
"Counseling" individuals is always the best course regarding coverage.
assumming they have uninterrupted driving expericance over 3 years verifible license in U.S.A; no more than one point within the last 3 years;no major violations in the last 7 (whether or not it shows on the dmv report or not) ALL companies are required in california to provide a good drivers. Mercury will offer a rate to over 75. I think that if an agent is concerned about the driving ability of a driver over 75 years due to personal knowledge that may open up a whole new can of worms with respects on the agent declining to provide coverage. I know agents who strongly recommend that they provide coverage for both the auto and home before they will provide a quote. In addition the application process can be delayed due to agency rules regarding personal inspection of vehicles and personal interviews with drivers. There is a diffence of opinion with some that an agent should be able to write the kind of business and limits that they target. I do know that they are required by law to offer 15/30/5 regardless of agency target, but some choose to rely on the freedom or business right to do business they way they choose. A dilemma.
Are you in California? Do you work for a Mercury agency/broker? If so, it would be interesting to hear what kind of perverse logic your employer would have for instituting such an ignorant rule. The insurance code is very clear regarding the issue you have brought up. On its face, it is definitely illegal. If you would like some citations referenced from "the code", feel free to ask.
I work for a Mercury agency with several offices in Southern California. They have been writing for Mercury since the 60s.
The term you used, "perverse logic" fits well. It seems as though the agency loss ratio started going up a few years ago and from what I understand, Mercury shaved a point or two off the agency's commission in the (MCC) tier from a 20% level. One of the ways (there are others) the owners of our agency decided to combat the increasing loss ratio was to institute the rule I described.
Most of our agents recognize what the ownership is doing, is ethically wrong and illegal, but we continue to go along with the rule(s) due to the fear of losing ones job if anyone was to speak up too much. The individual that initiated the rule(s) in question would best be described by his employees as extremely arrogant and self-centered who thinks he can do no wrong. He has a propensity to lash out and be vindictive to those who don't agree with him.
Thanks for offering the info regarding the insurance code. It would be great if you could post some citations. Maybe it would dissuade other Mercury agents who have also decided to take the law into their own hands. From what I understand, this is where our owner originally got the idea, from other Mercury agents. Some of us have thought of going to the DOI to get a cease and desist order issued. Do you think this would be a wise thing to do?
Maybe it's time to look for another job. Anyone out there who would like to hire a hard working, detailed oriented and ethical Mercury agent?