Plaintiff’s Attorney: Says Spitzer Will Change Little
By Steve Tuckey
National Underwriter News
March 31, 2005
A prominent policyholder's attorney told a gathering of insurance industry professionals yesterday that New York State Attorney General Eliot Spitzer's headline-making probe of their business will do little to punish an offending brokerage.
Eugene Anderson, founding member of the New York-based firm of Anderson Kill & Olick, gave that assessment in an appearance before the New York chapter of the CPCU Society which included his analysis of the Marsh & McLennan Companies brokerage scandal.
MMC—which has seen three of its executives plead guilty to criminal charges and has agreed to pay an $850 million settlement to customers—was accused in a lawsuit by Mr. Spitzer of price-fixing, bid-rigging and steering customers in exchange for fees amounting to payoffs from cooperating insurers.
Mr. Spitzer is currently a candidate to be the Democratic nominee in his state's upcoming gubernatorial contest.
"Do you think Eliot Spitzer thinks he will be elected governor if he causes the elimination of 6,000 [Marsh] jobs in lower Manhattan," Mr. Anderson said. "So, as to the question of what will he do with Marsh, I think the answer is as little as possible."
Marsh in October said it would no longer accept insurer incentive fees from controversial placement agreements. Mr. Anderson did not say what further steps he would like to see Mr. Spitzer take.
His "Ethics or Lunch?" was billed as an address discussing the likelihood of changes from investigations and "the applicability of ethical principles to insurance claims handling."
Mr. Anderson told his audience, which took his remarks in stride, that the insurance industry has a "just say no" policy when it comes to honoring claims from insureds, and when policyholders look to the courts the deck is stacked against them.
"What the policyholders will find are judges bottle-fed by the insurance industry who are determined to settle cases before they go to a jury," he said. "They are on a first-name basis with their friends in the industry—and if you don't think that matters, then you are mistaken."
Jury trials result in jammed dockets and are avoided at all costs by judges, said Mr. Anderson.
Mr. Anderson saved his greatest fire for departing American International Group chairman Maurice Greenberg, who this week stepped down as chairman as his company admitted it had improperly accounted for a variety of transactions that could lower company book value by up to $1.7 billion.
"At AIG they have a course called Ethics 101. And what that means is $1 for AIG, zero dollars for the policyholder, and $1 dollar for AIG," Mr. Anderson said.
The attorney said that Mr. Greenberg built his company into a major force in the industry by breaking contracts with impunity, knowing that most policyholders would not fare well in the courts, if the cases got that far.
Tony Rosa, a broker with the New York-based NIA Group, said he took issue with Mr. Anderson's assertion that nothing has changed as a result of the damaging headlines of the past six months.
"What we are seeing is a great deal of concern over how the clients are going to account for their coverage on the financials," he said.
Mr. Anderson, 77, is the son-in-law of Robert Morganthau, who at 85 is seeking re-election as New York district attorney. "I hope you vote for him, because if he loses I will have to give him a job," he quipped.