New York Gov. Eliot Spitzer hammered out one last contingent commission settlement before leaving the state attorney general post.
Metropolitan Life Insurance Company, New York, responded to Spitzer’s concerns about its group insurance sales practices by agreeing to pay $2.5 million in fines and $16.5 million in refunds to customers.
Metropolitan Life, a unit of MetLife Inc., New York, also agreed to stop paying contingent commissions to brokers who participate in the purchase of group life insurance, group disability insurance, group long term care insurance and other group products, according to officials in the New York attorney general’s office.
Metropolitan Life “will provide full disclosure of broker compensation to employers at every stage of the insurance purchasing and renewal process,” officials say in a statement.
The Metropolitan Life settlement and other recently announced settlements are part of an ongoing investigation into allegations of bid rigging and steering in the insurance industry, officials say.
In the document that describes the Metropolitan Life settlement agreement, New York officials allege that Metropolitan Life executives told sales personnel to make use of contingent commission arrangements known as override agreements by telling brokers how close they were to override agreement performance triggers.
“In the settlement, MetLife does not admit liability as to any issue of fact or law,” MetLife says in a statement.
MetLife adopted some of the changes in compensation arrangements included in the settlement agreement when New York officials started investigating the arrangements, the company says.
“MetLife cooperated fully with the [attorney general's] office throughout the pendency of the matter,” the company says. “MetLife believes that resolving this matter is in the best interests of its shareholders, customers and policyholders. MetLife does not expect that the settlement will adversely affect its business.”