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UnumProvident Modifies Producer Compensation
Practices in Response to Industry Developments
CHATTANOOGA, Tenn. (March 30, 2005) – UnumProvident
Corporation (NYSE: UNM), the nation’s leading disability provider, today
announced that it is making a series of changes in its producer compensation
and disclosure practices in response to ongoing developments within the
industry. The company further indicated that additional changes may be made as
more information is available from within the industry and from regulators.
“This past fall, when industry-wide questions surrounding producer compensation
were raised, we initiated a review of our compensation practices and, although
that review is still ongoing, we have generally found that our programs and
procedures met or exceeded industry standards,” said Thomas R. Watjen,
president and chief executive officer. “Nevertheless, we recognize that we must
take steps to be more responsive to the changing environment in which we now
operate. We continue to believe that one of the most important elements in
maintaining trust between the customer, producer and insurance carrier is a
high level of disclosure and transparency in all aspects of the relationship.”
UnumProvident’s arrangements going forward make it clear that customers can
obtain from producers information about all compensation paid to the producer.
As part of the changes to its policies and procedures, the company will provide
appropriate notices to customers stating its policy surrounding disclosure and
will provide information on its website about its producer compensation
programs. Additionally, any customer who wants specific producer compensation
related information can obtain this information by contacting UnumProvident’s
Producer Compensation Services toll-free number.
Other changes include requiring customer approval of compensation paid by
UnumProvident to the producer when the customer is also paying a fee to the
producer, and strengthening certain policies and procedures associated with new
business and quoting activities. A copy of a letter sent to producers outlining
all of the changes is contained on the company’s website at
www.unumprovident.com/salespartners.
“I believe that these are significant steps towards responding to a changing and
still uncertain environment, and I believe further changes are likely as we
learn more and as new policies are adopted by our federal and state regulators
or legislatures,” added Watjen. “We recognize, for example, that there are
still questions being raised about the role of ‘contingent commissions.’ While
contingent commissions represent a very small percentage of our overall
compensation arrangements, we are watching this area closely and will consider
alternative arrangements when there is more clarity on this issue as a
component of producer compensation in the future.”
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