In a strongly worded statement, the Minnesota Department of Commerce charged American Bankers Insurance Company of Florida and American Bankers Life Assurance Company with “willfully violating” Minnesota insurance law and said it will seek to stop the insurers from selling insurance in the state.
Minnesota Insurance Commissioner James Bernstein will also seek at least $10 million in fines.
American Bankers, based in Miami, for its part, filed a lawsuit in Minnesota district court on Feb. 5 asking the court to determine whether the department can impose additional penalties related to a multi-state market conduct exam dating back to 1998.
American Bankers, says company spokesman Jim Sykes, has already settled the issue through a 43-state agreement with regulators that included Minnesota. The agreement, he says, was reached in 1998 and included a $15 million settlement payment. Minnesota received $750,000 as part of that settlement, he adds.
A reexamination was agreed to and concluded in mid-2001, Sykes adds.
The department, however, contends the results of a market conduct exam show the companies have exhibited a “pattern of non-compliance” by illegally issuing more than 200,000 policies to Minnesota residents.
The policies sold, according to the department, were either not approved or had been disapproved and sales continued after the multi-state settlement.
“This group of companies is not interested in obeying the law. This is not a one-time mistake. There is a clear pattern of illegal behavior,” says Bernstein. “Because these policies have not been reviewed and approved by the Department of Commerce, there is no guarantee that consumers will get what they thought they were paying for.”
The Department also alleges the companies’ management to be “incompetent or untrustworthy by having been the subject of at least 66 other disciplinary actions imposed by Minnesota and other states.”
Types of insurance sold, the department says, include accidental death, health and disability policies. A mix of individual and group policies was sold by the company, according to Bruce Gordon, a department spokesman.
A March 8 hearing is scheduled. The judge will make a recommendation, but the commissioner will ultimately decide on any action, Gordon says.
If the companies are not satisfied with the outcome, the matter can be appealed to the Minnesota Court of Appeals, he adds.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 18, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.