HealthMarkets Inc. says a health insurance subsidiary will be paying refunds to customers in Maine because loss ratios have been below the minimum required level.
MEGA Life and Health Insurance Company, a unit of HealthMarkets, North Richland Hills, Texas, will be sending the refunds to Maine residents who bought MEGA coverage since the company began selling the affected policies in the state in 2004, HealthMarkets says.
Maine requires issuers of individual health policies in the state to set rates in such a way that claims equal or exceed 65% of premium revenue.
Officials at the Maine Bureau of Insurance have accused MEGA of charging inflated rates.
HealthMarkets says loss ratios fell below the minimum level because MEGA was new to the Maine market and claims were lower than expected.
HealthMarkets has agreed to resolve the investigation by issuing refunds to MEGA’s customers in Maine.
The Maine agreement calls for MEGA to pay $1 million in fines and $4.6 million in refunds to about 9,800 Maine customers, according to insurance bureau officials.