Metlife

Management Mistakes: MetLife – Poorly Controlled Sales Practices

Case Overview

Between 1989 and 1993 the Tampa office of MetLife saw tremendous growth and success, under the leadership of Rick Urso. He had the reputation of being a “Master Motivator”, and won the company’s Sales Office of the Year awards. He also had great financial success, with salary increases from $270,000 to over $1,000,000 in 1993 alone. Unfortunately, Urso’s rise to stardom was based on unethical practices. He was selling whole life insurance policies disguised as retirement plans to vulnerable single female nurses, with no beneficiaries. These policies had high premiums but only part earned interest and compounded on a tax deferred basis. The remainder that was paid covered the life insurance part of the policy. MetLife benefited from selling these policies because of the high commissions they made off of the sales.

Complaints began surfacing and eventually resulted in MetLife being charged with serious violations. They ended up paying $20 million in fines across 40 states, due to unethical sales practices. Additionally they had to refund up to 92,000 policy holders due to misrepresentation. Total refunds were expected to reach up to $76 million, and Rick Urso was terminated.

Case Analysis Questions:

Question #1: Should Rick Urso have been fired? Yes, he should have been fired. He was ultimately held responsible and was in direct leadership of the sales team in the Tampa office. He provided the direction to misguide the policy holders, which was both unethical and illegal. His actions endangered the reputation of the company as a whole, and led to the investigation of eighty-six other agents.

Question #2: Should the MetLife CEO and President be fired? Yes, the MetLife CEO and President should have also been fired. The whole issue with MetLife selling insurance policies as retirement plans was unethical. Executives and top management have the ultimate...