METLIFE AND GALLAGHER SETTLE ALLEGATIONS OVER COMMISSIONS

New York-based life assurer MetLife and Illinois-based broker Arthur J Gallagher have agreed to settle allegations stemming from investigations into improper payment or receipt of contingent commissions in commercial insurance deals. MetLife has agreed to pay $19m to settle charges tied to New York state AG Eliot Spitzer's two-year investigation into improper fees that insurers have paid to brokers that steer business to carriers. The settlement includes $16.5m in restitution to be paid to MetLife policyholders and $2.5m in civil penalties. With the deal, MetLife becomes the seventh major US carrier to reach allegations related to improper commissions and bid-rigging, following such insurers as AIG, Zurich American Insurance and Chubb. Mr Spitzer has maintained that contingent commissions paid to brokers are nothing more than kickbacks that in turn increase costs for policyholders. The MetLife settlement was one of several that Mr Spitzer announced in December in his last days as AG. He assumed the governorship on January 1. Meanwhile, Gallagher has agreed to pay $36.9m to settle a class-action lawsuit filed by customers over its acceptance of improper fees. The broker is to pay $28m in restitution to clients and $8.85m in attorneys' fees. Gallagher said that it will take a pre-tax Q4 charge of $5m to $10m for additional reserves to cover the settlement.