Do contracts designed to smooth out earnings at publicly held companies qualify as insurance? New York Attorney General Eliot Spitzer has joined forces with the SEC to investigate such "finite insurance" or "loss-mitigation insurance" agreements, according to the The New York Times today. "Bermuda Firm Is Subpoenaed in Inquiry Into Insurers"
The new subpoena seeks information from ACE, Ltd., based in Bermuda. Previous inquiries by the SEC and the state of Indiana had focused on finite insurance contracts written by American International Group (A.I.G.). The investigation adds to the focus on the adequacy of state regulation of the business of insurance, reserved to the states by the WWII-era McCarran Ferguson Act.
The Times notes: "The investigation has also raised questions about the quality and breadth of insurance regulation, which has been the responsibility of the states. The current regulatory framework will be the subject of a hearing in Washington today being convened by Senator Peter G. Fitzgerald, Republican of Illinois."
Sen. Fitzgerald is the Chair of the U.S. Senate Governmental Affairs Subcommittee on Financial Management, the Budget, and International Security. According to his website, the Subcommittee "will hold a public hearing on Tuesday, November 16, 2004 at 10:30 a.m. in Room SD-342 of the Dirksen Senate Office Building entitled, 'Oversight Hearing on Insurance Brokerage Practices, Including Potential Conflicts of Interest and the Adequacy of the Current Regulatory Framework.' This oversight hearing will focus on insurance brokerage practices, such as contingent commissions, that raise conflict of interest questions, and whether these practices harm consumers or suggest changes to the existing regulatory framework. "Posted by dougsimpson at November 16, 2004 05:36 AM | TrackBack