Meanwhile, the National Association of Insurance Commissioners held a conference call today to discuss possible actions they could take to deal with the widening broker-insurer kickback scandal. Joel Ario, Oregon insurance administrator said the group agreed to form a committee to address problems and begin an "aggressive fact-finding effort." Regulators will designate a representative in each department to gather information and field public inquiries, he said.

Commissioner Garamendi said that last Thursday, when New York Attorney General Eliot Spitzer filed a civil action accusing Marsh, the world's biggest brokerage, of rigging bids and fixing prices with major insurers in exchange for payoffs disguised as fees, California had planned to file a civil action as well, but "hit a speed bump."

Mr. Garamendi said he had been investigating the area of insurer incentive payments or contingency fees for brokers since February when the Washington Legal Foundation, a public interest group in Washington, D.C., had written to suggest there was conflict.

The California investigators, he said, have been working with Mr. Spitzer, whose investigation of national companies including Marsh, Aon, American International Group, ACE, The Hartford and Munich American Risk Partners revealed information about practices in California. He said he "will be working with that information" in his own lawsuit.

He said the investigation started with broker fee arrangements involving large commercial lines, and "as we moved along we discovered problems in other areas. What's going to be next? I don't know."

The new rules, the civil action filed, and his continuing investigation are "the first pages in a long and sordid book," commented Mr. Garamendi.

All of his proposed rules for agents and brokers, he said, repeat, strengthen and clarify existing regulations requiring full disclosure of agent broker compensation agreements and setting fiduciary duty requirements for brokers.

The new rules provide that violations can be punished with fines of $10,000 per incident and revocation of a company's or broker's license.

Brokers are not required to make their disclosures in writing, but Mr. Garamendi said he would "highly recommend they do so.

The new rules call for brokers to provide clients with the best insurer proposal available. It calls for punishment for failure to alert client to the best insurer selection, for advising not to select the best available insurer, and for failing to take reasonable measures to obtain a quote from an insurer that might be the best available.

"This industry is aware there are problems, and must now be in the process of cleaning up its act," Mr. Garamendi said. The new regulations "call for a clear definition of steering and make it clear it's not going to be tolerated in the State of California," he added, referring to the offense of "steering" an account to a particular carrier to the broker's benefit and the client's detriment.

Meanwhile, in Connecticut, officials confirmed that a joint investigation of brokers begun in August by Insurance Commissioner Susan Cogswell and Attorney General Richard Blumenthal has been expanded to look at antitrust activity.

The initial probe examining potential conflicts in the commercial insurance brokerage industry was kicked off with a questionnaire asking for dozens of details about commercial and group health insurance company commission agreements with brokers--whether they were written or verbal and whether they were tied to volume or profitability, premium size or quality of risk.

As part of the expanded inquiry, Mr. Blumenthal said that in the last couple of days subpoenas have been served on 20 property-casualty, health,auto and employee benefits insurers. He did not specify which firms were subpoenaed.

Mr. Ario in Oregon said that regulators will be coordinating their efforts with attorney generals' offices. He said that one of thesteps they are taking is to see what existing authority they have to prevent abuses. He said that a proposed regulation filed in Oregon this month woud require more disclosure of brokerage fees and any compensation from insurers and that the rule may be changed to give it additional strength.

The Oregon regulaltor said he thought that the NAIC coordinated effort could lead to market conduct exams of some companies. He noted that the issue of broker fees had been looked at once before by the New York Insurance Department, bu said the issue of bid rigging, "to my knowledges is quite new."