Well, today's Boston Globe lays out in great detail, the reasons why Mass Mutual Life insurance company terminated their President and CEO the other week.
As we all know, mutual insurance companies largely operate outside the glare of publicity because by their very nature they are essentially privately held and owned by their policy holders, and when was the last time you saw a policyholder revolt to toss out management? However, the world has changed for the imperial CEO's of the insurance world, the Hank Greenbergs, the Bob O'Connells, who was a former AIG guy, and others who have had their feet held to the fire by attorney generals in their states. You have to remember this is a group that was largely insulated from accountability because they only answered to state insurance departments.
Mass Mutual's board did the right thing and acted immediately to make sure that their outstanding name and reputation were protected, and from every reading they had more then ample cause from their actions. They are to be applauded for doing what they did, the way that they did, and they should ride this out looking better then ever when it's all done.
However, as I watch all this, my question is, when are some of the other long standing practices of in house direction of claims moneys to life subsidiaries, or the practice of sharing commissions on captive business on structured settlements, ala rebating, going to get the publicity they deserve. Any body in the business will tell you they are practices that need to be stopped as they are undisclosed and corrupt at their heart, but they continue on under the radar of the AG's and state regulators, and the practice of directing claims dollars to favored brokers or captive life markets continues on unchallenged for the most part.
I think it will end, it will end soon, and it will end badly. Some AG is going to hang another scalp on the wall, and the practice of rebating settlement annuity commissions, preferred broker lists, and in house life markets is going to fade away much as many of the other practices of the formerly uninvestigatged insurance world is having happen now.