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July 10, 2002 at 08:00 PM
NU Online News Service, July 10, 3:45 p.m. – Zale Corp., Irving, Texas, has agreed to a settlement related to the sale of credit life and disability insurance to its Minnesota customers, according to Minnesota insurance regulators.
The department has accused the discount store chain of selling credit insurance policies to customers who were unaware they had purchased a policy and misleading the purchasers by not telling them about coverage limitations and exclusions.
Although Zale has denied the Minnesota regulators’ allegations, the company has paid Minnesota $115,000 in civil fines and administrative costs and agreed to offer refunds to 5,000 Minnesota consumers who bought credit insurance in its Minnesota stores in 2000 and 2001, officials say.
Zale voluntarily stopped selling credit insurance as of Dec. 1, 2001, and it has agreed to permanently stop offering any type of credit insurance to new customers, officials say.
The settlement also requires Zale to cooperate with enforcement actions that the Minnesota Department of Commerce has started against the insurer that wrote the policies, American Bankers Insurance Group of Florida, Miami. Minnesota officials say.
But American Bankers, which has been a unit of Fortis since 1999, says Judge Judith Tilsen, a state district court judge in Ramsey County, Minnesota, issued a temporary injunction in May that limits the ability of the Minnesota Commerce Department to execute the enforcement action.
The judge ruled that she has jurisdiction to determine whether certain alleged violations cited in the enforcement action were resolved by 1998 and 2001 consent orders.
The Minnesota Commerce Department participated in the consent orders, then followed up in November 2001 by issuing a 195-count statement of charges against Zale’s Minnesota credit insurance operations.
In February, the department accused American Bankers of failing to provide information and violating Minnesota insurance law by issuing illegal insurance policies to more than 200,000 Minnesota residents.
American Bankers sought court review in February, shortly after Minnesota officials announced the new charges. American Bankers said it believed the consent orders had already resolved the dispute.
Tilsen did not rule on the merits of the case in the May injunction, but “she said that the court was concerned that Commissioner Bernstein was proceeding without regard to the consent orders,” American Bankers spokesman Jim Sykes says.
