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Conseco Finalizes Multistate Settlement Over Universal Life Policy Administration

Conseco Life Insurance Co., a wholly owned subsidiary of CNO Financial Group, has finalized a multistate settlement agreement concerning its administration of Lifetrend, a universal life product.
Conseco has said that due to an “administrative platform issue,” some policyholders over a period of years paid lower premiums, or no premiums, because they didn’t receive notice that additional premiums were due (BestWire, Jan. 12, 2009). The company considers Lifetrend to be a whole life insurance policy with optional premium payment provisions, said CNO spokesman Tony Zehnder said, noting they have not been sold for more than 10 years.
Officials began a review after receiving complaints from consumers that had received notices in the fall of 2008 regarding increases in policy costs, Insurance Commissioner Kevin McCarty said in a statement. Of the 12,247 Lifetrend policies that remain in force, 4,321 are owned by Florida residents, the Florida insurance office said.
The settlement agreement requires Conseco Life and its affiliates — Conseco Insurance Co., Conseco Health Insurance Co., Bankers Life and Casualty Co. and Washington National Insurance Co. — to improve their processes for identifying and correcting administrative system issues, according to the Florida Office of Insurance Regulation. A two-year process improvement monitoring period also was included in the settlement agreement. Florida’s share of the $1 million assessment will be about $200,000 based on a formula outlined in the agreement.
The OIR led the multistate effort by working with insurance regulators from California, Iowa, Indiana and Texas, it said in a statement. Regulators from the five states alleged that Conseco committed several types of violations, including allegations relating to misleading marketing and advertising materials and misrepresentation of benefits, advantages or terms of the policies, according to the California press release. However, “Conseco Life has not admitted or conceded any actual or potential fault, wrongdoing or liability in connections with any facts or claims that have been or could have been alleged against it,” the California release said.

This entry was posted on Friday, July 16th, 2010 at 2:52 am and is filed under Life Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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