For Immediate Release: April 18, 2008
National settlement with disability insurer nets $676.2 million in additional benefits for consumers
(St. Paul, MN --) The Minnesota Department of Commerce announced today the conclusion of a four-year long evaluation of the insurance claims handling practices of the UNUM Group. Minnesota joined a multi-state agreement reached in November 2004 by insurance regulators in Tennessee, Maine, Massachusetts, and New York and today's final exam report shows the company in full compliance with the 2004 order.
In addition to the multi state agreement which concluded this week, the Department of Commerce also completed its own market conduct exam in November 2004 and imposed an additional civil penalty of $250,000. The 2004 order also forced the company to change its claim filing policies and procedures and began a review of their marketing materials for compliance with Minnesota law.
Minnesota's 2004 market conduct exam of UNUM and its subsidiaries Provident Life and Accident Insurance Company and the Paul Revere Life Insurance Company found several violations of Minnesota insurance law:
Unum marketed their disability income policies without adequately explaining terms that may have impacted benefit payments
The company failed to comply with claim handling time periods regarding acknowledgments, investigations, and claim inquiries from policyholders
The company failed to provide clear explanations for the payment of benefits or claim denials
The company failed to inform the claimant of all available benefits
Unum failed to determine whether the recommended product was suitable for the applicant
Unum failed to pay interest or to properly disclose the interest paid on some life claims
The national agreement reached with the company in 2004 required a significant claim reassessment process of previously denied or terminated disability claims from approximately January 1997 through 2004. The new claims process reversed, in whole or in part, 41.7% of the claims reassessed resulting in a cumulative total of approximately $676.2 million of additional benefits to consumers across the nation. In Minnesota, 121 consumers received $4.6 million in additional benefits.
"This is a great example of state insurance regulators working together with a company to change their culture and make consumers whole in the process," said Minnesota Commerce Commissioner Glenn Wilson. "This national settlement is consistent with the agreement and fine we negotiated with UNUM in 2004."