New York State

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James J. Wrynn    Superintendent of Insurance    25 Beaver Street  New York, N.Y. 10004

ISSUED 10/16/2009 FOR IMMEDIATE RELEASE

INSURANCE AGENTS AND BROKERS FINED FOR ACCEPTING KICKBACKS

Accused of Accepting Gifts to Steer Customers to Two Specific Auto Glass Shops

Forty-three insurance agents and brokers have been fined a total of $42,650 for accepting kickbacks, or failing to supervise staff who accepted kickbacks, to steer customers to certain auto glass repair shops, Insurance Superintendent James Wrynn announced today.

The agents and brokers work at more than two dozen different insurance agencies in Western and Central New York. They are accused of accepting gift cards in return for recommending two specific glass shops to auto insurance customers who had filed claims to have their vehicles repaired.

State law prohibits insurance agents and brokers from accepting payments to steer their customers to specific auto repair shops.

The fines – ranging in amounts from $250 to $5,000 -- followed an investigation by the New York State Insurance Department. The investigation was conducted by Warren Lester of the Department’s Consumer Services Bureau.

Lester said the investigation was begun when Bison Glass, which operates throughout Western New York, contacted the Insurance Department and said it was discontinuing the practice because it could no longer afford to make the payments. A second glass repairer, Pat’s Glass Inc., which had operated in Wyoming County, provided additional information after it went out of business.

While it is unlawful for insurance agents or brokers to accept payments in return for steering business, it is not unlawful for a business, such as a glass repairer, to offer incentives to attract business.

The investigation found that the agents and brokers received gift cards for department and grocery store merchandise when they steered their customers to the two glass shops. The gift cards typically ranged in value from $35 to $60. Some of the payments added up to over $1,000 in value.

Two of the agents, John B. Conaway and Debra Dillenburg, were each ordered to pay $5,000, the largest fines imposed. Another agent, Kurt Silvestro, was fined $4,000.

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