Met Life Scandalous Sales Tactics

Met Life Scandalous Sales Tactics By: Insert name Insert name Insert name Insert name January 22, 2007 MGMT303

Table of Contents • Mission Statement • History • The Scandal • S.W.O.T. Analysis • Managerial Recommendation • MetLife Today • Peanuts Ads. And MetLife Logos

Mission Statement • MetLife’s corporate vision – to build financial freedom for everyone – guides the company’s response to people’s growing need for first-rate financial products and services through various life stages and economic cycles.

Simeon Draper • First leader of then “National Union Life & Limb” • Had difficult time getting the company going • Eventually stepped down and allowed others to take the business forward

History • For 137 years, MetLife has been insuring the lives of the people who depend on us. Our success is based on our long history of social responsibility, strong leadership, sound investments, and innovative products and services. • In 1863 New York businessmen invested $100,000 to start the National Union Life and Limb Insurance Company • In 1868 it changed its name to Metropolitan Life Insurance Company.

History cont’d • In 1915 MetLife became a mutual company and it began offering insurance two years later. • In 1929, smart planning and financial stability ensured that MetLife survived the stock market crash with barely a scratch. • In 1964, MetLife begins to change, dropping industrial insurance. • In 1974, it started offering auto and homeowners insurance.

History cont’d • In 1983, the company bought State Street Research & Management • In 1985, it bought Century 21 Real Estate and sold in 1995. It also bought London-based Albany Life Assurance • In 1988, bought Allstate’s group life and health business.

The Scandal • Summer 1993 Florida state regulators looked into sales practices used by agents under Rick Urso. • Florida charges 87 Met Life agents with fraud. • Met Life charged with violating several laws. License about to be revoked.

The Scandal cont’d • Whole life insurance policies were being sold as a “Retirement Savings Plan”. • Insurance agents were using the term “Nursing Representatives” instead of “Insurance Agents” when making sales over the phone. • A 1991 audit concluded that the terms Urso used were not appropriate to sell the products. Yet, nothing else happened to Urso.

The Scandal cont’d • Urso’s office’s sales jumped from $500,000 in 1989, to $2 Million in 1991. An anomaly amongst all offices. • Even other field managers were upset at Urso’s tactics. • December 27, 1993. Rick Urso was fired

The Scandal cont’d • Entire industry rocked by scandal. MetLife Insurance rating drops at several financial institutions. • Met Life is sued by employees for defamation of character, improper firing, and • Met Life settled in court to offer repayment to possibly over 60,000 customers amounting to over $62 Million.

S.W.O.T Strengths • One of the largest insurance companies in the world. • Met Life has been in business since 1868. • Met Life has been able to change along with the marketplace and remain profitable. • Ranks #35 on the Fortune 500 list, currently. • Name recognition AND well known “Peanuts” advertisements.

S.W.O.T. Weakness • Failed to watch for deceptive sales tactics. • Subject to marketplace. If wages go down, the need for life insurance may go down as well. • Sales force is very independent. Thus, it is very hard to monitor all branches and individual agents.

S.W.O.T. Opportunities • Met Life is able to branch out to many different industries. (Banking, Finance, Properties, etc.) • Expansion into foreign markets is a very large opportunity. • Can be a global leader in insurance.

S.W.O.T. Opportunities • In 2001 Met Life started the first bank owned by an insurance company, so people could reach their financial goals. • In 2005 Met Life acquired Citibank’s Traveler’s Life and Annuity. This included a lot of foreign business and all for only $12 Billion dollars. • Met Life foundation paid out $32 Million dollars in contributions to many different programs and organizations.

S.W.O.T. Threats • Met Life has aggressive competition from AIG and Prudential. • Major catastrophes can mean a lot of very large payouts. • Tightening of regulation by government at Federal and State levels.

Problem Analysis • Met Life was too lax in enforcing its ethics policies. There was no follow-through when violations were pointed out. • Met Life should not have been deceitful about who’s fault it was. Met Life was implicated in scandal after investigation by Thomas Tew, “Met tacitly condones efforts of its nationwide sales force to sell whole life policies disguised as savings or retirement plans.”1 1. Royal, Weld F. “Scapegoat or scoundrel?”. Sales & Marketing Management

Managerial Recommendation • Met Life should be monitoring their sales force more tightly. • They should not have decentralized their operations as far as their sales force is concerned. • Consumers should receive a copy of buyer's guide that describes how insurance policies work.

More Recommendations • All solicitations and materials, direct mail or advertising that go out to the customers need to be approved by the home office and their legal area and they have to have written authorization. • Every state has a 10-day free-look period that allows a policy buyer to examine a policy, and decide whether to keep it

MetLife Today • In 2000, Robert Benmosche took the company public and the stock offer raised $5.2 billion • The tragic events of 9.11 was a true test of MetLife. MetLife responded quickly. • MetLife signed a new contract to use Snoopy and the Peanuts characters for advertisement for another 10 years.

Peanuts Ads. And Met Life Logos

Met Life Scandalous Sales Tactics