New York Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills have come to an agreement with Universal Life Resources, a life and disability insurance consulting firm to resolve allegations relating to undisclosed contingent commissions, fraud and anti-competitive practices.
Under the agreement, Douglas Cox, president and CEO of Universal Life Resources, based in San Diego, and his affiliated companies, will provide $2 million in restitution to their policyholders across the nation who were harmed by their actions and adopt new business practices and fees to avoid conflicts of interest.
“The agreement with ULR represents another milestone toward curtailing undisclosed contingent commissions in the insurance industry,” Spitzer said. “Consumers of insurance products benefit
when these conflicts are exposed and eliminated.”
Insurance Superintendent Mills said: “This settlement is excellent news not only for those adversely affected by ULR’s contingent commission practices, but for all policyholders in New York. The reforms set forth in the settlement will provide greater transparency for consumers and further demonstrate our success in protecting New York policyholders.”
The agreement resolves a complaint filed Spitzer’s offiice and a citation filed by the Mills in November 2004 alleging that ULR received undisclosed payments from some of the country’s largest life insurance companies, including MetLife, Prudential and Unum Provident, in return for steering to them the business of ULR’s clients.
The complaint and citation also alleged that ULR imposed secret fees for “communications services,” such as the printing of informational materials, which were far above market rate.
Under the settlement agreement, Cox will pay $2 million into a fund from which its clients will be compensated.
In addition, ULR has agreed to limit its insurance brokerage compensation to a single fee or commission, a ban on contingent commissions and communication fees, and a requirement that
all forms of compensation be disclosed to and approved by ULR’s clients prior to their purchase of the insurance. ULR has also agreed to a monitor of its insurance related business practices for a period of five years.
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