MetLife fined $60 million by NY regulators

Advertisement

PRESS RELEASE: The following content has been reprinted in whole or part from a government-supplied press release.

Benjamin M. Lawsky, superintendent of financial services for the state of New York, announced that MetLife will pay $60 million for insurance law and other violations at its subsidiaries ALICO and DelAm, which it acquired from AIG in 2010.

Investigations by the New York State Department of Financial Services (DFS) and the Manhattan District Attorney’s Office uncovered that those subsidiaries solicited insurance business in New York without a license and made intentional misrepresentations and omissions to the Department about those activities. Of the $60 million, a $50 million fine will be paid to DFS and $10 million will be paid to the Manhattan District Attorney’s Office.

Benjamin Lawsky

Benjamin Lawsky

MetLife has also agreed to fully cooperate with DFS’s investigation concerning insurance law violations by AIG, ALICO and DelAm, and other AIG subsidiaries and affiliates related to conduct prior to MetLife’s acquisition. That investigation remains ongoing and is not resolved.

Superintendent Lawsky said: “Insurers have a responsibility to follow the law, play by the rules, and be honest with their regulators. Our department will continue to aggressively investigate and pursue wrongdoing within this industry wherever we uncover it. MetLife did the right thing by stepping up to resolve this matter.”

ALICO, while operating as a subsidiary of AIG in 2009, made intentional misrepresentations and omissions to DFS’s predecessor agency (the New York State Insurance Department) concerning ALICO’s insurance business activities in New York. Specifically, ALICO represented to the department that ALICO “does not solicit business in New York.”

DFS’s investigation, however, concluded that ALICO and certain alien insurers have collected approximately $900 million in premiums (including renewals) from multinational corporations involving contact with its New York sales representatives from 2007 to 2012. The department’s investigation uncovered the extensive insurance activities by ALICO, DelAm, AIG and MetLife related to that business from their respective offices in New York, including the following:

  • Sales representatives solicited in New York global employee insurance on behalf of ALICO and DelAm and their subsidiaries or affiliates, as well as insurers not affiliated with either company, without any such insurer being duly licensed in New York;
  • Sales representatives were engaged in direct selling in New York to multinational companies on behalf of ALICO and DelAm and their subsidiaries and affiliates as well as insurers not affiliated with either company;
  • Sales representatives conducted “road shows” in New York in order to solicit and sell group insurance products of ALICO, DelAm and their subsidiaries and affiliates and other unaffiliated insurers. The sales representatives, for example, conducted a “road show” at the AIG corporate dining room at 70 Pine Street for multinational companies with operations in Brazil. The Brazil “road show” was designed to generate new sales in the amount of $25 million;
  • Sales representatives had incentive compensation plans that compensated them for placing business with DelAm and the foreign operations of ALICO and its subsidiaries and affiliates and other unaffiliated insurers.

DFS is further requiring that MetLife take immediate steps to come into compliance with New York insurance law. The agreement requires licensing by DFS of the insurers and agents operating out of New York. ALICO and DelAm will be prohibited from, among other activities, underwriting, binding or negotiating the terms or conditions of an insurance policy or contract – or advertising – in New York on behalf of alien or foreign insurers while they work to come into compliance with New York insurance law.

Superintendent Lawsky also thanked Manhattan District Attorney Cyrus R. Vance Jr. and his office for their work and cooperation in this investigation.

Leave a Comment

Follow IFAwebnews: 
Important links and updates throughout the day via Twitter Join IFAwebnews’ Insurance News group on LinkedIn.com Become a fan of IFAwebnewss Insurance News on Facebook Feeds for all the ourinsurance news or just the lines you need. Insurance news delivered to your inbox
© 2013 New Horizon Group, Inc. :: Insurance & Financial Advisor | IFAwebnews.com :: NS 267 queries. 0.757 seconds.