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MARTHA COAKLEY

ATTORNEY GENERAL

September 19, 2007 - For immediate release:

ATTORNEY GENERAL MARTHA COAKLEY OBTAINS JUDGMENT AGAINST A LOCAL INSURANCE BROKER FOR INAPPROPRIATLEY ACCEPTING COMISSIONS

              WORCESTER – Attorney General Martha Coakley entered into an agreement late yesterday with Group Benefit Strategies (GBS), an Auburn-based insurance advisory company that allegedly allowed its agents to wrongfully accept insurance commissions in violation of consumer protection laws.  Under the terms of the settlement, GBS must pay $30,000 to resolve the allegations.  According to the complaint, filed last October in Worcester Superior Court, GBS misled certain municipal clients to believe that it did not collect commissions for dispensing advice on all group benefit insurance lines, including health, life and dental insurance.  Instead, GBS provided advisory services only on health insurance, and allowed its agents to recommend to its clients life and dental products for which they received undisclosed commissions. 

              “Municipalities should have full knowledge of any commissions that are generated by the insurance they purchase, so they can make the best choices for their employees,” said Attorney General Coakley.

              The complaint against Group Benefits Strategies arises out of the Attorney General’s ongoing investigation into the activities of brokers and advisors that work with Massachusetts towns and cities.  The investigation uncovered a variety of troubling practices relating to commission payments, including accepting both advisory fees and commissions, and failing to disclose lucrative bonus payments.

              The Attorney General’s Office offers the following guidelines when purchasing insurance: 

  • Know if you advisor is accepting commissions on an insurance product he or she recommends.  An advisor should not take money from both the customer and the insurance company.
  • Ask how much commission is earned on the policies purchased, and if the broker is accepting contingent commissions.  These large bonuses can cause your broker to steer you to a product that may not be in your best interest.
  • Know if earned commissions increase the price of insurance premiums.  “Above-standard commissions” can cause you to pay much more in insurance premiums.
  • Know if your insurance advisor is recommending you purchase products from an affiliate insurance company. 

              Assistant Attorney General Monica Brookman of Attorney General Coakley’s Insurance and Financial Services Division handled this matter. 

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