ALBANY, N.Y., January 9 – National insurance company Universal Life Resources (ULR) and its president and CEO Douglas Cox will pay $2 million in restitution to policyholders in order to resolve allegation of fraud and anti-competitive practices brought by New York State Attorney General Eliot Spitzer and Insurance Department Superintendent Howard Mills. The San Diego, California-based consulting firm, which specializes in life, accident and disability benefits, will also adopt new business practices and fees to avoid future conflicts of interest.

The agreement with ULR represents another milestone toward curtailing undisclosed contingent commissions in the insurance industry, said Spitzer. Consumers of insurance products benefit when these conflicts are exposed and eliminated.

The agreement stems from a complaint filed in November 2004 by the Attorney Generals Office and a citation filed by the Insurance Department, which alleged that ULR received undisclosed payments from some of the countrys largest life insurance companies, including MetLife, Prudential and Unum Provident, in return for steering to them the business of ULRs clients, according to Attorney General spokesperson Marc Violette. The complaint and citation also alleged that ULR imposed secret fees for communications services, such as the printing of informational materials, which were far above market rate.

According to the agreement, Cox will pay $2 million into a fund from which clients will be compensated. Consumers who retained Cox to place, renew, consult on or service group insurance with inception or renewal dates between January 1, 1999 through December 31, 2004, in instances where those transactions resulted in contingent commissions or overrides or payments of communication fees to Cox between January 1, 1999 through December 31, 2004 will be eligible to participate in the fund.

Cox must send notice to all eligible clients by February 1, according to the agreement, who will have until May 1 to respond. Distributions will be paid out on June 1.

ULR has also agreed to limit its insurance brokerage compensation to a single fee or commission, a ban on contingent commissions and communication fees, and a requirement that all forms of compensation be disclosed to and approved by ULRs clients prior to their purchase of insurance, Violette said.

To ensure compliance with these terms, ULR will retain a monitor, at its own expense, to oversee placing, renewing, consulting on and servicing of any policy for a period of five years, as stipulated in the agreement.

The settlement agreement was filed in New York State Supreme Court, New York County.