Watson Wyatt Hit with Spitzer Probe Subpoena

December 30, 2004 (PLANSPONSOR.com) - HR and benefit consultant Watson Wyatt & Co., has gotten a subpoena from New York State Attorney General Eliot Spitzer about certain of the firm's insurance placement compensation, the company has revealed in a securities filing.

Watson Wyatt said  in a document filed with the US Securities and Exchange Commission   that it had gotten the information demand December 17 and that it was “fully cooperating” with Spitzer’s office. The company said p reliminary data indicate that insurance override payments – one focus of the Spitzer information request – accounted for less than 2/10 of 1% of the firm’s revenues over the past four fiscal years.

Spitzer launched an investigation into the insurance industry earlier this year, targeting brokers and consultants that steer insurance and benefits business to providers paying the highest placement fees. In announcing the initial probe, Spitzer argued that these payments are actually kickbacks, corrupting what are supposed to be competitive bids for insurance coverage and needlessly driving up insurance costs.

In October, he filed a lawsuit against Marsh & McLennan Cos. owner of the world’s largest insurance brokerage (See Spitzer Takes On Contingent Commissions ). Last month he filed suit against Universal Life Resources, a benefits consulting firm (See  Spitzer Expands Focus in Insurance Probe  ).