Spitzer gunning for insurance industry
Cox News Service
May 5, 2005
Seattle: New York Attorney-General Eliot Spitzer, who earned a reputation for invest-igating Wall Street insiders and big pharmaceutical companies, has his sights fixed on the insurance industry.
Mr Spitzer is investigating one of the biggest insurers, American International Group, for accounting issues, and has long been outspoken in wanting federal oversight of the insurance industry.
But in a speech to the Society of American Business Editors and Writers in Seattle on Monday night, he called use of offshore subsidiaries a "black hole" and said state officials had failed in their regulation of the industry, as federal government had not done enough.
"We need fundamental rewriting of the insurance law," he said. "The insurance industry deserves real scrutiny. If there is a story to be written, it relates to these offshore subsidiaries … that have led to gamesmanship the likes of which none of us understand," he told the business journalists. "I guarantee you will find a mess."
Insurance industry spokesmen said he was overreaching.
"If Mr Spitzer finds persons who have done something wrong, he should take appropriate action," said Dennis Kelly, spokesman for the American Insurance Association. "However, an entire industry of hard-working individuals should not be smeared with a broad brush."
Brian Atchinson, executive director of the self-regulations [life] Insurance Marketplace Standards Association, said, "I'm first to say there's much needed modernisation of insurance regulation". But rewriting laws state by state would be a monumental proposition, he said, and federal regulation might not be any better than state regulation. "I think there are more targeted solutions for targeted problems."
Last month Mr Spitzer's office began auditing American International, better known as AIG, for alleged improper booking of worker's compensation premiums. The Securities and Exchange Commission and other regulators are also investigating the company, which after an internal review has already admitted to other accounting errors. On Sunday, AIG said it would restate its financial statements for the years 2000-2003.