Life Insurance Quote Overview

The Hartford, Travelers, CNA Paid Kickbacks to Agents

A $30 million settlement has been reached with Hilb Rogal & Hobbs (HRH), the nation's eighth largest insurance agency, for surreptitiously steering clients to certain insurers in exchange for hidden commissions.

The $30 million will be distributed to hundreds of thousands of consumers. This nationwide settlement is the first to involve insurance agents who sell primarily to individual consumers and small businesses.

The company has also agreed to adopt significant reforms, unprecedented in the industry, including a "Customer Bill of Rights" that informs consumers of their right to know up front HRH's compensation arrangements with insurers.

"This $30 million settlement is a major milestone in our fight against improper insurance practices � the first to involve personal lines of insurance and to reveal hidden payments to agents as well as brokers," Connecticut Attorney General Richard Blumenthal said.

"Hundreds of thousands of ordinary consumers paid higher premiums to insure their homes or cars because HRH secretly steered clients to a select group of insurers in exchange for improper hidden payments."

The settlement was reached after Blumenthal's office uncovered several agreements where HRH secretly steered clients to certain insurers in return for undisclosed commissions. Many of the agreements secretly rewarded HRH for directing personal line clients � those seeking homeowners and automobile insurance � to HRH's select group of carriers, dubbed the "Big 3." The Big 3 included The Hartford, Travelers and CNA.

The state's investigation also found HRH steered consumers to insurers where HRH had a partial undisclosed ownership interest in the companies. HRH also took payments up front from insurers including MetLife and CNA, disguising the payments as "loans." In return, HRH funneled clients to those companies.

"These unconscionable business practices raised insurance costs for consumers who were systematically steered in exchange for the biggest bonus to HRH, not the best deal for the client. The scheme also stifled competition, shutting out the dozens of insurers from HRH's preferred stable," Blumenthal said.

HRH has also agreed to cooperate in an ongoing investigation involving employee benefit insurance, such as health, disability and group life insurance.

HRH will notify by mail those clients eligible for cash from the settlement fund. The notices will be delivered before or by Aug. 1, 2006. Those clients will be instructed to return their notice of settlement and a claim form to HRH by Nov. 21, 2006.

Under the settlement, HRH has also agreed to cooperate with the attorney general's ongoing insurance investigation and adopt additional business reforms, such as:

• Disclosure of all bids and quotes received by the broker on behalf of the client.

• A prohibition on accepting any contingent compensation for its brokerage business.

• Mandatory training of all HRH sales staff regarding commission issues.

• Creation of a Business Practices Committee at HRH to monitor compliance with this settlement agreement.

• HRH must disclose to clients its ownership interest in insurers.

Referred from: (http://www.consumeraffairs.com)