A California regulator filed a lawsuit against Universal Life Resources of San Diego and four major insurance companies, accusing them of hiding millions of dollars in secret commissions. During a press conference, Commissioner Garamendi announced that a settlement had been reached with Universal Life requiring the broker to end these practices immediately.

“These brokers and insurers are lining their pockets at the expense of consumers,” said Commissioner Garamendi. “This is a scandal that has disillusioned consumers from coast to coast.”

The lawsuit, filed in California Superior Court in San Diego, charges the defendants with violating state law by withholding from clients information about the secret deals struck with Universal Life. According to the complaint, Universal Life would steer clients to the four insurers in order to satisfy the secret financial arrangements, regardless of whether the insurance products were the best available.

“Employers and consumers put their trust in brokers to help them find the best insurance at the best price,” Commissioner Garamendi said. “This lawsuit is one of many steps I will take to ensure that insurance consumers don’t suffer because of backroom kick-back deals.”

Defendants named in the suit include MetLife Inc., Cigna Corporation, Prudential Financial Inc., and UnumProvident Corporation as defendants. They are accused of collaborating with Universal Life to carry out the schemes that caused financial harm to California consumers, Garamendi said.

On Wednesday the Commissioner reached the settlement with ULR, which immediately and permanently bans the firm from engaging in these practices and requires the firm’s cooperation in the ongoing investigation.

(via California Department of Insurance)