In the second major settlement of a rebating case this month, NY Attorney General announced a settlement against two of the major title companies that do business in the US, obtaining an agreement to reduce rates by 15% in NY state, as well as pay fines of $2 million dollars to the state.
A little bit of searching however turns up more stories and more details on the settlement, which was just with the two largest companies, Fidelity National Title and First American, who paid undisclosed rebates to large commercial customers in the shopping mall and chain store business, in return for guaranteed business on their commercial projects. While these were the big fish, the Attorney General made it clear an investigation into the brokers, real estate agents and others who steer residential business to title companies are part of an ongoing probe into these practices.
This follows on the heels of his settlement with Hartford Insurance Group to settle claims that they paid excess commissions or rebates to a select group of brokers who control a large portion of the group annuity business that specialized in terminal pension funding. Again, the facts in that case closely followed many of the other major cases opened and prosecuted or settled under the Attorney General, in that a practice of steering business to markets that might not otherwise be competitive on price, in return for secret payments, rebates or extra commissions was the core of the scheme.
This should be worrisome to the settlement industry as I keep getting emails and notes from various sources informing that inquiries are being made by certain entities into commission sharing, steering, rebates and approved lists by various state insurance and attorney generals offices. As I've said since I started this blog, if you can't or won't disclose how you get paid, or how you select a market for your client, then you are doing something wrong and you need to stop. If we don't get our collective house in order it is only a matter of time before someone gets it in order for us, and we might not enjoy the outcome.