Met Life Drops Execs Amid Probes : Insurance: While states investigate possible ethics violations, firm sets up a multimillion-dollar restitution effort for policyholders.
In an effort to put a growing scandal behind it, Metropolitan Life Insurance Co. on Monday announced the firing, resignation or retirement of seven executives, a restitution effort for policyholders that could cost as much as $30 million and a new compliance program to monitor agents.
In an interview, Harry P. Kamen, Met Life’s chairman and chief executive, described how the company had ignored warning signs of unethical practices that he said began in its Tampa, Fla., office and spread elsewhere.
“You could say the company is a little too trusting,” he said, referring to incidents in which auditors told executives to stop certain practices and assumed that the orders were carried out. In one instance, he said, auditors at the company’s home office uncovered practices in Tampa that were counter to Met Life policy. Although the problems were reported to the appropriate executives, no action was taken.
But, said Kamen, “we know what went wrong. We’ve taken corrective action; we want to go forward.”
The company is under investigation in a number of states--including New York, Florida, Texas and Pennsylvania--for activities such as mailings to nurses that disguised whole life insurance as purely a retirement investment. Many experts consider insurance a poor investment for retirement. People who cash whole life policies in after a short time often find that expenses have consumed all their cash.
State regulators applauded Met Life’s actions but said they will continue their investigations. “We’re encouraged by what we think is a comprehensive approach to the problem,” said Kevin Foley, deputy superintendent of New York’s Insurance Department. But he added that the department will continue to investigate the matter, and it is possible that Met Life will face disciplinary action or fines in the future.
Foley also said the department has begun to investigate other insurers. He said he expects to uncover similar problems at other companies.
The highest-ranking executive whose departure was announced Monday was Richard M. Maurer, the No. 2 person in Met Life’s personal insurance operation, who essentially oversaw the company’s 13,000 agents.
Other executives whose departures were announced include Arthur L. Spector, a vice president in the New York home office, and Daniel (Rick) Urso, the former district sales manager in Tampa. Florida investigators have said that 20 million flawed sales letters were sent out of that office alone.
The company had earlier announced the firings or resignations of a number of other managers, especially in its western Pennsylvania operation, where agents have been accused of urging customers to trade in old policies for new ones in order to generate commissions.
Kamen said Met Life will work with state insurance departments to set up a restitution program for “any policyholder who was misled or deceived into buying a life insurance policy on the basis of . . . unapproved sales literature.” Met Life expects up to 18,000 people to take advantage of the offer, at a cost of up to $30 million.
The company’s new compliance program aims to convert what Kamen described as a fragmented monitoring system into one that is centralized and accountable to the chairman. Met Life said it also plans to start a companywide training program for agents. Currently, training is done locally.
