MetLife is the latest to settle with New York Attorney General Spitzer for its use of contingent commissions. With UnumProvident and Prudential Financial already paying millions in fines and restitution to customers, MetLife will now pay $16.5 million to policyholders and $2.5 million in New York penalties.
What is amazing is how long all of this has gone on. For years after the scandal first broke, the contingent and unreported commission practice has continued. Smaller benefits brokers and benefits consultants continued to insist on these behind the scenes incentives to put more business with a particular company long after one would have thought the threat of embarrassment and common sense would have prevailed.
The ERISA required form 5500 always required full disclosure. Yet the industry ignored it. Insurers paid, brokers and consultants collected, and employers looked the other way.
Things have been particularly bad for my old company––UnumProvident. They not only got caught up in this as the benefits commission payment poster child for sleeze, but paid another set of fines and settlements to state insurance departments for even sleazier claim practices.
The chickens always come home to roost!
Anyone still on the take with these back room commission deals would be wise to pay attention.
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