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UNUM LIFE INSURANCE COMPANY
2211 CONGRESS STREET
NAIC GROUP CODE - 0565
RESPONSE TO MARKET CONDUCT
REPORT OF EXAMINATION
JUNE 30, 2001
Inadequate, disorderly, inaccessible, or inconsistent records can lead to inappropriate handling of claims, inappropriate underwriting decisions, inappropriate rates and other issues. The Company's policies and procedures in this area are an important part of the internal control environment.
Examiners reviewed the current record retention policies and procedures of the Company and noted that these polices meet the requirements of the State of Maine. Maine Statutes Chapter 24-A §3408 states that "Every domestic insurer shall have and maintain its principal place of business and home office in this state, and shall keep therein accurate and complete accounts and records of its assets, transactions and affairs in accordance with the usual and accepted principals and practices of insurance accounting and record keeping as applicable to the types of insurance transacted by the insurer". During testing, examiners noted several areas where the Company was not able to provide complete or adequate documentation as noted below:
This standard is designed to evaluate the representations made by the Company about its products. Based upon review of the above sample, the following comments and exceptions were noted:
During review of the advertisement sample, various test steps were developed based upon Maine Rule 140.
It was noted by the examiners that in accordance with Maine Rule 140, insurers are required to file an annual certification executed by an authorized officer of the insurer wherein it is stated that to the best of his/her knowledge, information and belief, the advertisements which were disseminated by the insurer during the preceding statement year complied with or were made to comply in all respects with the insurance laws of the State of Maine as implemented and interpreted by Maine Rule 140. Examiners noted that the Company had not previously filed such certification with the Maine Bureau of Insurance. The Company also notes that the certification is completed for numerous states. Items inserted in the annual report package are gathered based on a checklist developed and published by the state. The checklist did not specify the advertising certificate of compliance, therefore it was not submitted.
During review of the Company's record keeping for their Internet web sites, it was noted that documentation of past Internet advertisements was not available. The Company's response indicated that the current process for back-up and retention of the e-advertisements on the web sites was that IBM makes a tape backup of website files and retains the last four web iterations. The Company also indicated that they were currently reviewing this archive process. Electronic or hard copies of the Company's web pages should be maintained.
Because the State of Maine has no statutes, rules or regulations relating
to replacement requirements and the Company has advised that their internal
policy only relates to individual life policies and that they do not market
individual life policies in Maine, this standard would not be applicable.
Examiners selected a random sample of terminated producers and verified that these producers were no longer soliciting new business for the Company.
During this review, the Company was requested to provide the examiners
with copies of termination letters sent to providers upon termination
of their appointment. The Company advised that they do not retain copies
of the letters. The provision applicable during the exam period, Title
24-A Section 1441-B states in part that the insurer "shall provide
90 days" advance written notice of the termination. Accordingly,
examiners were unable to determine whether proper notification per Section
1441-B had been given for 19 items in our sample of 19. In addition, the
Company has advised that their current producer agreement stipulates the
"[T]he agreement will terminate at the sole discretion of either
party, upon thirty (30) days written notice of termination given by either
party to the other". This agreement also seems in violation of Section
1441-B(1), the applicable law for the period examined. The Company
notes that as a result of the exam requests, a new business practice was
implemented to retain copies of all producer termination letters.
Inconsistent handling of rating or underwriting practices, even if not intentional, can result in unfair discrimination. A review of a sample of underwriting files indicated that there appears to be no instances of unfair discrimination. However, the following exceptions were noted during the review.
During review of the sample of individual products (LTD, STD, LTC, ID and Life) Examiners noted the following:
One application in the ILTC sample also appeared to have taken an unusually long period of time for review and denial. The application was signed and dated on February 16, 2000, but the denial letter in the file was dated May 10, 2000. A deposit premium was also given with the application and was not returned until May. Information in the Company's underwriting system indicated that the application had been originally denied for asthma, although supporting documentation in the file was unavailable. The Company notes that the delay in sending the denial resulted from the agent's late submission of the application. Apparently, the agent held the file for a month awaiting resolution of the applicant's workers' compensation case.
The ID terminations, declinations, and cancellations review noted one exception where the termination effective date requested by the insured did not agree with the system termination effective date. The insured had requested termination effective on June 1, 2000, but the policy was not terminated until June 6, 2000. The termination delay resulted in an additional return premium being due to the insured as of the date of this examination.
Also, during review of the ID terminations, declinations and cancellations,
one policy was noted as having been terminated at the insured's request.
The Company incorrectly calculated the return premium based upon the wrong
effective date, but subsequently corrected the error. The correct amount
was ultimately returned to the insured; however, a revised notification
letter was not prepared and sent to the insured in accordance with Company
Maine Statutes Title 24-A, Section 2164-D require acknowledgement with reasonable promptness to pertinent written communication with respect to claims arising under its policies. This section also requires the Company to provide forms, accompanied by reasonable explanation for their use, necessary to present claims within 15 calendar days of such a request.
The examiners used seven samples to examine the Company's claims (as noted above). The examination disclosed that in general the Company appears to be making a good faith effort to contact its claimants within the required time frames.
During review of the paid life claims, it was noted that 5 claims out
of a sample of 50 did not contain an acknowledgement of the claim in accordance
with the Company's Customer Care Center customer service guidelines. The
guidelines state that if a claim is turned around within 3 to 5 business
days, the need for claim receipt acknowledgement is eliminated. For the
5 claims noted, the claim was not processed within the 3 to 5 business
day timeframe and no acknowledgment was included in the file. The company
notes that the guidelines were published in April 2000. With one exception,
each of these claims was received prior to the implementation of the guidelines.
Last Updated: October 22, 2013
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