The largest U.S. insurer, MetLife Inc. has just agreed to pay $13.5 million to settle a federal government investigation into improper payments. These payments were made to a San Diego-based insurance broker. The U.S. Justice Department said the millions of dollars of payments MetLife made to the insurance broker, were not shown to MetLife’s customers or reported by MetLife as required by the Employee Retirement Income Security Act of 1974.

According to the agreement entered into by the New-York based company, MetLife had adopted a program of undisclosed payments designed to induce the insurance broker and its top executive to recommend MetLife to its other clients. It was said that MetLife’s sales force was also instructed to leverage the improper payments to promote MetLife products. The U.S. Attorney’s Office in San Diego said that it agreed to the settlement, mostly because of MetLife’s voluntary and full disclosure of conduct, its cooperation and previous payments to its policy holders.

MetLife reserves the right to change the terms of the Supplemental Compensation Plan or to discontinue the sale of any product. It is not MetLife’s practice to specifically factor Supplemental Compensation into the price of a customer’s group insurance plan. However, Supplemental Compensation is a component of MetLife’s Institutional Business distribution expenses and, like other expenses, is factored into the price structure of MetLife’s Institutional Business products.

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