New York–New York's top insurance regulator Howard Mills told a meeting here that State Attorney General Eliot Spitzer's probe of the insurance business caused unnecessary harm to industry workers and stockholders.
The state insurance superintendent's criticism Friday came with an announcement he is starting a new unit to investigate industry abuses that he said will conduct operations in a more precise and less damaging way than Mr. Spitzer.
"These efforts can be done a lot more surgically. They do not need to be done in so public a way as to damage the stock of a public company and cause 5,000 people to lose their jobs," he said in a reference to one of Mr. Spitzer's targets, Marsh and McLennan Companies.
Mr. Spitzer's office said later that Mr. Mills' comments could damage the working relationship of the two agencies and inject political partisanship. See related story in NU Online..
Since October 2004, when Mr. Spitzer began inquiries into transactions used to create improper financial statements and commercial insurance price-fixing by brokers and various carriers, MMC has announced the layoff of 5,500 workers and its stock price has dropped by 33 percent.
The stock of American International Group, another target of the attorney general's probes, has declined during that period from over $70 to below $50 a share.
Mr. Mills told the Association of Insurance and Reinsurance Runoff Companies that his investigatory unit, titled the Corporate Practices Unit, will consist of five attorneys looking into abuses.
Mr. Mills' criticism of Mr. Spitzer comes as the attorney general is looked on as the certain favorite to win the Democratic nomination for governor next year and possibly oppose the man who appointed Mr. Mills, Republican incumbent Gov. George Pataki.
Mr. Mills in announcing his new unit said, "I am not trying to out-attorney general the attorney general."
His criticism is in contrast to a legislative hearing in January, where Mr. Mills' predecessor, Gregory V. Serio, and Mr. Spitzer carefully complimented each other for the role they took in the investigations.
They did, however, engage in a certain amount of one-upmanship as to who initiated the whole probe and who might have dropped the ball. Mr. Mills' criticism of Mr. Spitzer is a lot more pointed than any directed at the attorney general by Mr. Serio.
In other news, Mr. Mills said the department will adopt the National Association of Insurance Commissioners model regulation regarding finite reinsurance. It calls for full disclosure and CEO attestation that the contracts actually transfer risk.
While an earlier circular letter to the industry from Mr. Mills concerning the same topic took a tougher approach, Mr. Mills said the NAIC model was adopted in the interest of uniformity.
Also, Mr. Mills said his department would no longer conduct regular periodic market conduct exams but rather "shift to a risk-based exam structure."
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