Insurance commissioners nationwide, including those from Virginia, Maryland and the District, waded into the growing industry scandal yesterday, holding a teleconference to coordinate the investigation and regulation of the way carriers reward brokers for sending them business.

California Insurance Commissioner John Garamendi also unveiled regulations that make clear brokers may not steer contracts to particular insurance companies for these "contingent commissions."

Garamendi and New York Attorney General Eliot L. Spitzer, who last week charged broker Marsh Inc. with accepting kickbacks and rigged bids for corporate liability insurance, credited a District public interest group with alerting them to the issue.

The Washington Legal Foundation, a free-market-oriented public interest group, wrote Spitzer and Garamendi and others that the decades-old contingent commission system was creating unacceptable conflicts of interest. Spitzer's office then targeted Marsh, the nation's largest corporate insurance broker, after receiving an anonymous tip from an insider.

Since Spitzer brought civil charges against Marsh last Thursday, the scandal has engulfed large portions of the industry and sent insurance-related stocks downward.

Dutch insurer ING Group's stock fell 1.39 percent, to $25.49, yesterday after the company disclosed it had received a subpoena; Aetna Inc. shares tumbled 11 percent Tuesday after a similar disclosure; and Marsh parent Marsh & McLennan Cos. stock has sunk more than 40 percent since Spitzer's announcement.

Spitzer's office also has hit several other brokers and life, health and property insurance carriers with subpoenas asking for documents about the contingent commissions -- fees paid by insurance carriers to brokers who send them high-volume or high-quality business. Carriers Cigna, MetLife and Prudential, and brokers Aon Corp. and Willis Group all have confirmed receiving subpoenas.

The Marsh complaint also named but did not charge property insurers American International Group, Ace Ltd., the Hartford and American Re, citing e-mails in which the carriers discussed falsifying bids to help Marsh steer contracts to particular companies.

Nor is investigation confined to group or corporate insurance. Connecticut Attorney General Richard Blumenthal said his probe, which started in June, is focusing on health and automobile insurance, including policies sold to individuals.

In many insurance areas, companies and individuals hire brokers -- and pay them commissions -- to solicit and evaluate bids from insurance carriers, but many brokers also accept payments from the carriers for sending them high-volume or low-risk business. The carrier payments are not supposed to affect the brokers' recommendations, but state regulators are uncovering evidence to the contrary.

"I was astonished and shocked by some of the conduct we uncovered," Blumenthal said, adding that he has sent out 20 subpoenas and intends to propose legislation requiring either detailed disclosure or the elimination of contingent commissions.

Garamendi said, "The customers and consumers in this nation, from the largest corporations to the smallest mom-and-pop in their homes, have been denied the opportunity for the best deal on insurance."

Unlike the mutual funds and investment banks that were the targets of Spitzer's previous investigations, insurance is regulated primarily on the state level. So Spitzer needs the cooperation of his counterparts in other states and state insurance commissioners to force industry-wide change.

"We look forward to close cooperation with insurance commissioners around the nation. We view this as the only way to get to the bottom of all this," said Spitzer spokesman Darren Dopp.

The state insurance commissioners' teleconference yesterday was the first of a series to coordinate investigations of the contingent commission issue. The commissioners have worked in concert before on national issues and are trying to avoid hitting the industry with multiple requests for the same information, said Connecticut Commissioner Susan Cogswell.

Virginia regulators are scrambling to figure out how and whether the allegations affect local residents. The state requires insurance agents and consultants to disclose their compensation, but it does not regulate pure brokers, said Ken Schrad, spokesman for the State Corporation Commission, which includes the insurance bureau.

District law makes clear that insurance brokers must act in the best interest of their clients, said Insurance Commissioner Larry Mirel, adding that his office is now investigating whether any local brokers have breached that requirement.

Maryland Commissioner Alfred W. Redmer said his office has seen no examples of bid-rigging in this area. He now plans to do what he calls "outreach" to carriers and brokers in the state to make clear "we will not tolerate individuals engaging in inappropriate activities."

Some industry analysts said that in the end the scandal will hit insurance sellers -- brokers, agents and consultants -- much harder than the carriers themselves.

That's because contingent commissions are a revenue source for brokers but a cost for insurers.

Marsh already has renounced contingent commissions, which brought in $845 million last year. AIG and Ace have said they won't pay the fees, and many industry insiders say the other big carriers may not be far behind.

"The other insurance companies are sitting back and loving this. . . . They're not going to be paying these enormous commissions" anymore, said Steve Schreckinger, head of the insurance practice at Palmer & Dodge, a Boston law firm.

But other industry experts aren't so sure that contingent commissions will disappear because some carriers rely on the agents to evaluate the quality of the customer and send them good business, said University of Georgia professor Robert E. Hoyt.