MetLife Insurance Co., the nation's largest group life insurer, reached a final settlement with the New York State attorney general's office Dec. 29, concluding an investigation into allegations the insurer engaged in bid rigging and client steering to illegally inflate its profits. MetLife agreed to pay restitution of $16.5 million to policyholders without admitting any wrongdoing.
According to a statement released by the New York AG's office, MetLife instructed its sales personnel to offer brokers bonus compensation if they met certain targets for directing business to the company.
Under the new agreement, MetLife will adopt a new compensation structure that eliminates the payment of contingent commissions to brokers on life, disability and other group insurance products. In addition, the company will provide full disclosure of broker compensation to employers at every stage of the insurance purchasing and renewal process.
The settlement is just one of a string of settlements former New York Attorney General Eliot Spitzer--now the state's governor--pursued to combat client steering in the insurance industry. Two other providers of group insurance, UnumProvident and Prudential, have settled similar charges.