The insurance probe started last week by New York Attorney General Eliot Spitzer into kickbacks and other improper incentives in the U.S. insurance industry is widening into other states and moving toward the employee-benefits arena.

Stocks of U.S. companies providing health insurance and other employee benefits were hit hard Tuesday.

In California, insurance regulators reportedly are hiring San Diego class-action law firm Lerach Coughlin Stoia Geller Rudman & Robbins LLP. The hiring may be a prelude a legal fight against insurance brokers and insurers whom regulators allege cheated employees by signing insurance packages with insurers paying the biggest commissions, not providing the best prices and terms.

Meanwhile Dutch financial-services group ING Groep NV today confirmed that it has received a subpoena from New York’s attorney general as part of a wider investigation into possible fraud in the insurance sector.

Marsh & McLennan Cos., named in Spitzer’s original complaint, yesterday suspended four employees.

The move by the insurance broker represents the first company fallout from the scandal.

The day after the charges were filed, Marsh replaced the chairman and chief executive of Marsh Inc., its insurance-brokerage unit, but said it didn’t reflect on his performance.