Conseco Inc. was slapped with a $2.3 million fine after insurance regulators discovered lapses in the company’s long-term-care insurance claims and complaints processing.
The Carmel, Ind.-based carrier will also have to pay $30 million in claims-handling improvements and restitution.
A team of 40 insurance regulators, including Florida and Pennsylvania, investigated Bankers Life and Casualty Insurance Co. of Chicago and Conseco Senior Health Insurance Co. of Bensalem, Pa., both subsidiaries of Conseco.
Although the company had self-reported some problems in handling claims, the examination revealed that Conseco didn’t have the procedures in place to process the claims and complaints in a timely manner.
Regulators also found that there was no evidence that Conseco provided clients with information on its complaint-handling procedures.
Additionally, Conseco didn’t always complete a claims investigation within 30 days. Instead, it would bundle claims together and pay them at once, resulting in delays.
Inappropriate use of “hold” claim status also delayed payments to clients.
As part of Conseco’s settlement with regulators, Conseco Senior Health will review 1,112 claims it had originally denied and provide notices to 18,000 policyholders whose claims may have been partially or subsequently denied. The company also must set up a call center for customers who think that their claims were improperly settled.
Conseco Senior Health Insurance is no longer writing new business.
Bankers Life, as part of its settlement, will also have to improve its agent training program and eliminate producer complaint thresholds, so that one complaint can lead to disciplinary action.
Agents for the company will be supervised and terminated if they don’t comply with marketing standards.
If Conseco doesn’t make the proper corrections, it will be fined an additional $10 million.
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