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NEW YORKMetropolitan Life Insurance Co. has become the latest life insurer to settle charges of deceptive broker compensation practices, reaching a $19 million agreement with New York.
Without admitting or denying wrongdoing, MetLife late Friday agreed to pay $16.5 million into a policyholder restitution fund and pay another $2.5 million in civil penalties to resolve the investigation by former Attorney General and now New York Gov. Eliot Spitzer.
MetLife, the nation's largest group life insurer, also agreed to stop paying contingent compensation to its producers except in limited circumstances and only with the attorney general's prior consent. It also agreed to provide existing and prospective clients with written notice of all compensation that its producers may receive.
The settlement follows similar deals in recent weeks between Mr. Spitzer's office and UnumProvident Corp. and Prudential Insurance Co. of America. MetLife reached its settlement Dec. 29, only days before Mr. Spitzer was sworn in to his new post and was succeeded as attorney general by Andrew M. Cuomo.
Allegations against MetLife and other insurers grew from New York's insurance industry compensation investigation that began in late 2004. Initially concerned with property/casualty placements, the investigation expanded to life/health coverage and focused particularly on the practices of Universal Life Resources Inc., a now-defunct life and disability broker.
Mr. Spitzer leveled charges of deceptive compensation practices against MetLife, some involving ULR, in a settlement document signed last week. The attorney general charged that MetLife:
In November, UnumProvident agreed to pay $15.5 million in restitution and a $1.9 million fine to New York and simultaneously settled charges brought by California regulators.
In a statement, MetLife said that it "cooperated fully" with the attorney general's office and "believes that resolving this matter is in the best interests of its shareholders, customers and policyholders."