NU Online News Service, Aug. 16, 4:20 p.m. – AAA Life Insurance Company, Livonia, Mich., has agreed to pay a civil penalty of $75,000 for insurance law violations involving the marketing of life insurance policies to American Automobile Association members in Minnesota, according to Minnesota insurance regulators.
Minnesota regulators have accused AAA Life of violating Minnesota insurance marketing regulations by mailing faulty marketing materials to as many as 464,230 state residents between 1999 and 2002.
The solicitations, which resulted in 827 sales of group term life insurance policies, contained several misrepresentations and failed to provide certain required disclosures required by state law, regulators say.
Regulators say, for example, that AAA Life inaccurately stated that its policies could only be purchased during a limited enrollment period. That violates a Minnesota insurance rule that prohibits insurance companies from using false deadlines to pressure customers to make purchasing decisions without adequate time to review and investigate an offer.
AAA Life also stated that continued membership in AAA was not required to continue the policy when, in fact, the policy itself clearly stated that coverage would terminate when AAA membership terminated, regulators say.
AAA Life has agreed in a consent order to stop soliciting and enrolling Minnesota customers in group life insurance until the company’s marketing and advertising practices comply with Minnesota law.
The company must also submit an annual affidavit stating that its advertisements have complied with state statutes and rules. For the three years in question, AAA Life either did not file the affidavit or falsely stated under oath that it had complied with Minnesota law, Minnesota regulators say.
Robert Dotson, general counsel of AAA Life, says the company has already addressed the Minnesota regulators’ concerns.
“All of the violations have been corrected and all of the products are approved,” Dotson says.
“The violations arose because of the use of an inappropriate brochure, so as long as they’re not using that brochure, the issue would have been addressed,” says Gary LaVasseur, deputy commissioner of the Minnesota Department of Commerce, the department that regulates Minnesota insurance companies.