The agreement comes as part of a settlement relating to allegations of deceptive and anti-competitive practices in the sale of group insurance products to US employers, according to a press release by Spitzer’s office. In addition, the insurer has agreed to provide full disclosure of broker compensation to employers who seek to purchase insurance for their employees through Prudential.
Prudential will also provide restitution of $16.5 million to policyholders and pay civil penalties totaling $2.5 million.
The investigation of Prudential began soon after Spitzer started a broader probe of bid rigging in the insurance industry. According to the press release, the investigation revealed that from 1999 to 2005, Prudential paid approximately $60 million in overrides to brokers on approximately $18 billion in insurance premiums. Prudential also paid certain brokers case specific overrides or “single case overrides” in order to, among other things, close a deal or encourage future business and, on certain occasions, built the cost of these single case overrides into the premiums, Spitzer’s office said.
“Today’s settlement compensates nationwide employers seeking to provide group benefits for their employees” Spitzer said, in the press release. “This settlement also helps restore integrity to the insurance marketplace by mandating complete disclosure of payments to brokers.”