CHATTANOOGA, Tenn., Nov. 1, 2006 – UnumProvident Corporation (NYSE:UNM) today announced it has reached a settlement agreement with the Attorney General of the State of New York that directly resolves all issues raised by the Attorney General’s office in its review of the company’s broker compensation practices. The review was part of a larger investigation of broker compensation practices in the insurance industry.
Under the settlements announced today, UnumProvident will be implementing a new, simpler compensation program for its employee benefits products. Additionally, the company is expanding its disclosure of broker compensation programs, enhancing a policy that is already among the most comprehensive in the industry. UnumProvident had previously taken a number of steps to enhance transparency by establishing, in March 2005, disclosure policies that provided customers with a means of obtaining information about the compensation paid to their brokers. The company at that time discontinued all programs that provided loans, equity investments, contests, trips or other incentive programs to brokers.
“We have worked cooperatively with the New York Attorney General since questions were first raised about the industry’s compensation practices,” said Thomas R. Watjen, president and chief executive officer of UnumProvident. “We responded immediately by establishing what ultimately were viewed as industry leading disclosure practices. This agreement is a natural extension of that effort. During our discussions we proposed to the Attorney General a new compensation plan which is simpler and more transparent. This agreement incorporates our new approach, which we believe can be a model for our industry.”
Also as part of the settlements, UnumProvident has agreed to pay a fine of $1.9 million and to establish a national restitution fund of $15.5 million for any customer determined to be harmed by its past practices.
“We are pleased to have these issues resolved with New York, and to have established the national fund for any restitution that may be required,” added Watjen. “Most importantly, it resolves the matter in a way that is good for our customers and at the same time recognizes the extremely important role that independent brokers play in our business.”
UnumProvident intends to announce in the near future the specific details of the new compensation structure. More information will be available at that time.
About UnumProvident
UnumProvident (www.unumprovident.com) is the largest provider of group and individual income protection insurance, and one of the leading providers of employee benefits products and services, in the United States and the United Kingdom. Through its subsidiaries, UnumProvident insures more than 21 million people and provided $6 billion in total benefits to customers in 2005.The HR industry´s premier online community and resource for Human Resource professionals: HR, human resources, HR community, human resources community, HR best practices, best practices in human resources, online communities for HR, HR articles, HR news, human resources articles, human resources news, HR events, leadership, performance management, staffing and recruitment, benefits, compensation, staffing, recruitment, workforce acquisition, human capital management, HR management, human resources management, HR metrics and measurement, organizational development, executive coaching, HR law, employment law, labor relations, hiring employees, HR outsourcing, human resources outsourcing, training and development
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