Senate hears Spitzer probe claims

Spitzer's investigation has been forcing changes in the industry

New York Attorney General Eliot Spitzer has told a US Senate committee that many insurance brokers engage in "systematic" market manipulation.

Insurance companies and brokers fixed bids and steered clients to preferred firms in return for payoffs, he said.

The behaviour could mean a need for federal standards for accountability in the industry, he warned.

Mr Spitzer, who is known for crusading against corporate wrongdoing, is investigating the insurance industry.

He warned that further disclosures of bad practice were likely.

"There have been criminal pleas entered, there will be more criminal pleas entered very shortly," he said.

No competition

Hours after he spoke at the congressional hearing, two executives at Zurich American Insurance pleaded guilty in New York to criminal charges and agreed to co-operate with Mr Spitzer's investigations.

The Zurich underwriters admitted to following and executing the directions from a broker to submit bids designed to lose, resulting in the appearance of competition while in fact the business was being steered to a predetermined favourite.

Mr Spitzer filed a civil lawsuit in October against the world's biggest insurance broker, Marsh & McLennan.

He alleged that it conspired with a number of insurers to fix quotes for cover and collected big "contingent commissions" from insurers for placing business with them.

The company has since announced changes to its business practices and commissions.

A number of other large insurers were named in Mr Spitzer's suit.

The attorney general also filed a lawsuit against insurer Universal Life Resources last week.