“Given the company's size and position in the property-casualty insurance industry, we do not believe it is surprising that St. Paul Travelers has been included among the companies asked to provide information,” the Minnesota-based carrier said. “St. Paul Travelers will cooperate fully with the attorney general's requests for information.”

The company said it is conducting its own internal review and has “found no evidence of bid-rigging or other illegal practices.”

Last week, Liberty Mutual said that it, too, had received a subpoena from the New York attorney generals office. The Boston-based carrier said “it is entirely to be expected that we would be asked about our sales practices,” adding that it is cooperating in the investigation.

In a civil lawsuit filed by the attorney generals office, Mr. Spitzer charged that the Marsh brokerage unit was rewarded with payoffs from insurers as part of a system in which the broker fixed prices, rigged bids and steered business to carriers at inflated prices.

To date, the seven other insurance companies that have said they received subpoenas from Mr. Spitzers office include American International Group, Chubb, Firemans Fund, The Hartford Financial Group, MetLife Inc., Aetna Inc., and CIGNA Corp. Other companies have been implicated in Mr. Spitzers suit, including ACE and Munich-American Re.

Three insurance executivestwo from AIG and one from ACEhave already pled guilty to fraud charges and are cooperating in the probe.

Besides Marsh, Aon, Willis and Hub Groups subsidiary Kaye Insurance have also said they received subpoenas as part of Mr. Spitzers probe. It has been reported that a number of privately held brokerage firms have also received subpoenas, but none have said so publicly.

Robert P. Hartwig, senior vice president and chief economist for the Insurance Information Institute in New York, said he is not surprised to hear that St. Paul Travelers received a subpoena, and expects that before the investigation winds down most major insurers will receive requests for information concerning contingency fees.

Mr. Spitzers suit, he said, is already affecting the industry after the countrys three major brokersMarsh, Aon and Willissaid they would no longer accept contingency fees, adding that he expected others to follow. There could also be some job losses as brokers seek to keep their bottom lines intact and adjust to new compensation schedules that involve fees for services to replace the lost income from contingencies, he said.

As Jan. 1 renewals come around, chief financial officers will expect their risk managers to show they are “being tough,” getting the best product for the best price, which will mean shopping around for new brokers and insurers.

Reproduced from National Underwriter Edition, October 28, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.