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ALBANY---Metropolitan Life Insurance Company, the largest group life insurer in the nation, has finalized an agreement with the state Attorney General's office to settle allegations of deceptive practices in the sale of group insurance products.
The claim arose out of MetLife's use of "contingent commissions" or "overrides" to reward brokers who induced their clients to purchase insurance from the company. MetLife is the largest life insurer in the United States, selling one in every five group policies purchased.
Under the agreement, MetLife will adopt a new compensation structure that eliminates the payment of contingent commissions to brokers on life, disability and other group products, and will provide full disclosure of broker compensation to employers at every stage of the insurance purchasing and renewal process. MetLife will also provide restitution of $16.5 million to policyholders and pay civil penalties totaling $2.5 million.
This settlement follows closely on the heels of agreements between the New York Attorney General and two other key providers of group insurance, UnumProvident and Prudential. These cases are all part of a broader, ongoing investigation of bid rigging and steering in the insurance industry.
In the Assurance of Discontinuance setting forth the parties' agreement, the Attorney General alleged that MetLife had instructed its sales personnel to "leverage" override agreements by informing brokers how close they were to meeting certain targets for business provided to MetLife, targets that would trigger additional compensation. MetLife also entered into particularly lucrative compensation agreements with that awarded MetLife particular insurance contracts. 12-30-06
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© 2006 North
Country Gazette
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