DISABILITY INSURER SIGNS “MODEL” PACT OVER COMMISSIONS

UnumProvident Corp. disability insurance company has ended what New York Attorney General Eliot Spitzer called deceptive practices and secret payments to brokers, according to a $15.5 million settlement announced earlier this month.

UnumProvident, based in Chattanooga, Tenn., agreed to pay restitution to policy holders and a civil penalty of $1.9 million. Many of the reforms in the settlement, which Spitzer said should serve as a model for the industry, were suggested by Unum, Spitzer said.

Spitzer had accused the company of improperly compensating brokers who pitched several insurance companies’ policies to prospective customers. Spitzer said the company will be the first life and disability insurer to prohibit “contingent commissions” on group insurance policies and to disclose all compensation of brokers.

The practices prohibited under the settlement were done throughout the industry, said Jim Sabourin, spokesman for Unum.