NEW YORK--UnumProvident Corp. has reached an agreement with New York Attorney General Eliot Spitzer to resolve an investigation into the ways the disability insurer compensates brokers and consultants, Mr. Spitzer's office announced Wednesday.

Under the agreement, Chatanooga, Tenn.-based UnumProvident has agreed to pay $15.5 million in policyholder restitution and a $1.9 million civil penalty, and to change certain practices, including ceasing to pay contingent commissions on all group insurance products and providing full disclosure of broker compensation to group insurance clients, the attorney general's office said in a statement.

In the statement, Mr. Spitzer alleges that UnumProvident used a "variety of undisclosed compensation programs," including payments made to brokers "based on their ability to persuade clients to renew policies in the face of rate increases, and loans made by Unum to brokers that could be 'earned off' if Unum obtained a sufficient amount of business from the brokers' clients."

Mr. Spitzer noted that his probe of UnumProvident, which began in 2004, arose out of his investigation into client steering and bid rigging in the insurance industry, which has resulted in several settlements against brokers and insurers.

"This settlement eliminates incentives for brokers to act against their clients' interest, and ensures full disclosure of Unum's compensation arrangements," Mr. Spitzer said in the statement. "These reforms, many of which were conceived by Unum itself, will help restore the integrity of the market and promote competition."

"We have worked cooperatively with the New York Attorney General since questions were first raised about the industry's compensation practices," Thomas R. Watjen, president and chief executive officer of UnumProvident, said in a statement. "We responded immediately by establishing what ultimately were viewed as industry leading disclosure practices. This agreement is a natural extension of that effort. During our discussions we proposed to the Attorney General a new compensation plan which is simpler and more transparent. This agreement incorporates our new approach, which we believe can be a model for our industry."

UnumProvident said in its statement that it would soon announce the specific details of its new compensation structure.