The settlement came after two years of investigation and negotiations among the companies, insurance regulators and attorneys representing policyholders.

The insurance work - representing policyholders in accident claims - is not particularly sophisticated, other insurance lawyers say.

In reaching the settlement with lawyers representing policyholders, the company denied any wrongdoing, Mr. Foley said.

Jeannine W. Chanes, a lawyer who specializes in representing policyholders, said that many small businesses were unsure of what kind of insurance they had, and that many had no insurance at all.

He added, "The Insurance Department has many constituencies, and is not in a position to represent policyholders."

The policyholders, lawyers representing policyholders and some actuaries, who own policies, questioned Metropolitan Life's procedures for valuing the company and allocating shares to policyholders.

Many owners in the area were also confused about their insurance, said Jeannine W. Chanes, a lawyer who represents policyholders and volunteered to provide legal advice for affected small businesses.

"You have people with claims having to take nickels on the dollar," said B.K. Christopher, a Kansas City, Mo., a lawyer who represents several former Reciprocal policyholders.

Customers of New York Life not satisfied by the no-questions-asked offer may take their case to an arbitrator, who will evaluate each case according to guidelines agreed to by the company and lawyers representing policyholders.

"These companies have essentially turned their bureaucracies into profit centers," said Glenn R. Kantor, a California lawyer who has represented policyholders.