KANSAS CITY, Mo. (Jan. 3, 2008) — Led by the Washington and Alaska insurance departments, state insurance regulators today announced the results of a multi-state market conduct examination of HealthMarkets, Inc. Thirty-five states and the District of Columbia participated in the examination.

“Our examination stemmed from the volume, scope and nature of complaints made against the companies by consumers and policyholders in several different states,” said Washington Insurance Commissioner Mike Kreidler, who also chairs the National Association of Insurance Commissioners’ (NAIC) Market Regulation and Consumer Affairs Committee. “We consolidated and coordinated our regulatory response so that we could better protect insurance consumers by responding to these issues on a nationwide basis.”

In the 112-page examination report, which covers a five-year period, state insurance regulators cite numerous deficiencies in the following areas of the companies’ operations:

• Oversight, communication, monitoring and training of agents
• Processing and handling of claims made by policyholders
• Disclosure of relationships with membership associations and affiliated companies to consumers and policyholders
• Handling of policyholder complaints and grievances
• Adherence to a compliance plan

The HealthMarkets (formerly UICI) companies examined include MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and Chesapeake Life Insurance Company. MEGA agents sold policies through the National Association for the Self-Employed and Americans for Financial Security. Mid-West agents sold plans through the Alliance for Affordable Services.

A multi-state settlement group — headed by Washington and Alaska — will determine which enforcement actions will be applied to the companies, as well as identify how the companies can improve the problems and issues outlined in the report. A settlement agreement is expected to be completed this spring.

The following regulatory jurisdictions participated in the multi-state market conduct examination: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Hampshire, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Click HERE for a complete copy of the HealthMarkets multi-state market conduct examination report.

Click HERE for an FAQ document regarding multi-state market conduct examinations.

About the NAIC

Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC at www.naic.org/press_home.htm.

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©2008 National Association of Insurance Commissioners. All rights reserved.
 

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