UNUM Landmark Multi-State Settlement Agreement and Examinations Concluded

April 15, 2008

 

Contact: Mila Kofman, Superintendent
Phone:

 

Augusta -

The Bureau of Insurance today announced the completion and release of a report on the approximate four-year long evaluation of the insurance claims handling practices of the UNUM Group. A multi-state agreement reached in November 2004 by insurance regulators in Tennessee, Maine, Massachusetts, and New York and accepted by 48 states and the District of Columbia has come to a favorable conclusion for disabled consumers and for UNUM going forward.

In this unprecedented approach, state insurance regulators partnered with an insurer to successfully change corporate culture. Millions of disabled people across the nation have benefited. A copy of the just released final exam showing full compliance is available on the Maine Bureau of Insurance web site under Bureau Reports at the following link: http://www.maine.gov/pfr/insurance/company/examreports/2007/pdf/UnumMultistateExaminationReport_4-14-08.pdf

The agreement reached with the company in 2004 included making significant changes in corporate governance such as adding three new directors subject to approval of state insurance regulators to its Board of Directors, implementing new claims procedures and standards for claims processing, enhancing and implementing new internal quality controls, and requiring hands-on involvement of its Board of Directors in ensuring successful implementation of the new processes. The agreement also included strong and continuous oversight, such as quarterly evaluations and monitoring the company by Maine’s insurance regulators as well as other lead states.

The agreement also required a significant claim reassessment process of previously denied or terminated disability claims from approximately January 1997 through 2004. The claim reassessment process and the subsequent examinations are now complete. Applying newly prescribed, highest in the industry review standards, the process reversed, in whole or in part, 41.7% of the claims reassessed resulting in a cumulative total of approximately $676.2 million of additional benefits to consumers across the nation.

“This case -- the market conduct exam, the settlement agreement, and the recently concluded quarterly reviews – is an excellent example of effective state-based insurance regulation for insurance consumers,” stated Maine Insurance Superintendent Mila Kofman. “Regulators identified a problem and worked together to effectively address it.”

“Not only is this an example of state insurance regulators working effectively to protect the nation’s insurance consumers, it is also an example of an insurer reforming its practices and becoming a model for other insurers. The strong new processes and the resulting change in corporate culture – measured by the very low rate and in some cases a 0% error in claim determinations is remarkable,” Kofman said.

Last Updated: April 7, 2009 2:42 PM