November 7, 2004
Florida Attorney General Charlie Crist has issued subpoenas to 11 insurance companies as part of an investigation into the business practices of the insurance industry.

The subpoenas seek documents and records that involve questionable fee arrangements and possible bid-rigging. On November 5, the Attorney General issued subpoenas to 10 insurance brokers.

The Attorney General seeks to determine the current manner in which insurers utilize contingency commission arrangements. There are indications that insurance brokers have improperly steered business to insurers that pay the brokers the highest fees rather than seeking the best deals for their customers. There are also indications that the companies may have engaged in bid-rigging.

The alleged practices could be in violation of Florida's antitrust laws, Chapter 542, Florida Statutes. Penalties allow fines of $1 million for corporate violations and $100,000 for individuals, and for three times the amount lost due to illegal activities.

"At this point we are seeking to determine whether violations of Florida law have occurred," said Crist. "Our primary interest rests with the Florida consumers. We are looking into whether members of the industry placed their wallets ahead of the interest of their clients."

The Attorney General is investigating arrangements between insurers and brokers and whether business was directed to companies that would provide brokers with higher fees. The Attorney General's Office is also working with a task force established by Florida's Chief Financial Officer.

The following insurance companies are receiving subpoenas:

• National Union Fire Insurance Co. of Pittsburgh, PA;
• American International Specialty Lines Insurance Co.;
• Continental Casualty Co.;
Lexington Insurance Co.;
• Scottsdale Insurance Co.;
• Federal Insurance Co.;
• Ace American Insurance Co.;
• Zurich American Insurance Co.;
• St. Paul Fire & Marine Insurance Co.;
• State Farm Florida Insurance Co.;
and • Twin City Fire Insurance Co.

Florida's Attorney General is among several state Attorneys General - including New York, Massachusetts, California, Connecticut and Ohio - that have opened investigations into insurance industry practices.