Mr Spitzer is not afraid of taking on the biggest business names

The insurance industry reeled last week when Mr Spitzer sued Marsh & McLennan, the world's largest insurance broker.

He alleged that it got illegal payments for steering clients to selected firms.

Since then, at least three US states have said they are studying the lawsuit and speculation has increased that Mr Spitzer will go after more firms.

Shockwaves

"It's scaring to death anyone invested in the sector," said Tim Ghriskey, chief executive of Solaris Asset Management.

"It intimates that brokerage fees could potentially become transparent to consumers and that will increase competition. As a result, brokerage fees might decrease.

"Consumers will benefit, but it will squeeze companies."

Shares of health insurer Aetna tumbled 12% on Tuesday, while Cigna lost 10%. Both companies said that they had received subpoenas from Mr Spitzer.

Legal documents were also sent to Metlife, the biggest US life insurer, and disability insurer UnumProvident.

Consumer champion?

Mr Spitzer has made his name taking on some of Wall Street's biggest names, winning settlements more often than not, and forcing them to rethink the way they work.

In his case against the insurers, Mr Spitzer alleges that unsuspecting clients were deliberately steered to firms in return for lucrative payoffs, a move which pushed up prices.