HealthMarkets, Inc. and its affiliate companies, MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company, and Chesapeake Life Insurance Company have been fined $325,000 for failing to comply with the requirements of a 2008 national settlement.
The original settlement invoked a $20 million fine on the companies and was the result of a three year multi-state exam that found multiple problems involving consumer disclosure, oversight and training of agents, claims handling, and complaint handling practices.
According to the agreement, the companies had to meet 95 specific performance measures in 13 areas or face an additional penalty of up to $10 million. The areas needing improvement included:
- Agent training and oversight
- Claims handling
- Identification of company
- Transparency of the companies’ relationship with associations
- Complaints and grievances
- Cancellation, nonrenewal and discontinuance notices
- Establishing and maintaining a compliance program
Insurance Commissioner Mike Kreidler’s office led a five-state team (Washington, Alaska, California, Oklahoma, and Texas) charged with re-examining the companies’ progress and found the companies met 90 of the 95 specific performance measures laid out in the original settlement agreement. The five standards Health Markets did not meet involved agent training and oversight.
“Even though the settlement process is over, we’ll continue to watch these companies closely,” said Kreidler. “Consumers deserve to have accurate information about the insurance they’re buying.”
Kreidler also thanked his staff and the other states for their efforts in the settlement process.
The $325,000 settlement will be divided between the 48 states, District of Columbia and four other U.S. territories. Washington state’s share, which goes to the state’s General Fund, is $19,963.
The Health Markets companies have approximately 25,473 policyholders in Washington state.
