'Bribes' Are Rife in Insurance Industry, Suit Alleges

"We are definitely interested in broadening this inquiry, and investigating smaller brokers is one [way]," says Brown.

But with so many state regulators looking to join the fray, it's not clear yet who -- if anyone -- will be the first to target the alleged deals between insurers and small brokers.

It very well could be California's Garamendi, who earlier this week announced a new series of regulations that require brokers to "disclose any financial incentive" they receive for steering business to a particular insurance company.

Garamendi's office also is close to hiring plaintiffs' firm Lerach Coughlin Stoia Geller Rudman & Robbins to pursue litigation against the insurers.

The Lerach firm already has begun to target one small broker, Universal Life Resources, a California firm run by Douglas Cox. The firm has brokered insurance policies for a number of tech companies, both big and small, including Intel and Sun Microsystems. In a lawsuit filed a week ago under the same California private attorney general statute, the Learch firm alleges that Universal Life took kickbacks from a number of insurers. Cox denies the allegation.

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