A top West Coast regulator says he is working with a San Diego lawyer to investigate insurance broker compensation problems.[@@]
California Insurance Commissioner John Garamendi brought the lawyer, John Stoia Jr., to a press conference today to speak about investigations against Universal Life Resources, San Diego, an employee benefits broker, and 4 large insurers that had override commission arrangements with Universal Life.
Garamendi said at the press conference that he has reached a settlement agreement with Universal Life that establishes a detailed, nationwide injunction prohibiting Universal Life from taking undisclosed commission overrides or other hidden payments from insurers.
Garamendi said he continues to move ahead with the suit against the insurers. The insurers named are CIGNA Corp., Philadelphia; MetLife Inc., New York; Prudential Financial Inc., Newark, N.J.; and UnumProvident Corp., Chattanooga, Tenn.
Representatives for the companies named in the Garamendi suit said they could not comment on the allegations because they had not seen the complaint. But they said their companies have cooperated and will continue to cooperate with the investigations.
Universal Life said it settled with the California department without making an admission of guilt and welcomes the resolution of the compensation disclosure issue.
It’s not yet clear whether future suits will name additional brokers or insurers as defendants, Garamendi said.
“There are other investigations under way,” Garamendi said. “We’ll see what we find.”
Garamendi’s current suit asks only for injunctive relief from Universal Life and the other defendants, not for monetary damages. But “this is not the only action against ULR,” Garamendi said.
Future suits filed on behalf of the commissioner and the people of California will seek restitution for victims and disgorgement of ill-gotten gains, Garamendi and Stoia said.