Attorney General Says Insurance Department Failed To Penalize Company For Improperly Denying Coverage
The Few, The Proud, The Insurance Notes! Reader:
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A quick one today, but just to note that Connecticut Attorney General Richard Blumenthal has picked up where Spitzer left off and has been on a sustained campaign as that state’s de facto insurance regulator, this in Hartford, traditionally the nation’s insurance capital.
His office has recently announced major settlements against the once-tolerated-but-nonetheless corrupt practice of insurers paying brokers to steer corporate business their way. The cases involve important insurers, including Chubb ($17 million fine), St. Paul Travelers ($77 million), The Hartford ($20 million), Ace ($80 million), Zurich ($153 million, involving several states) and a new lawsuit against Liberty Mutual alleging a bid-rigging and kickbacks conspiracy.
Which raises the question: Who is Connecticut’s insurance commissioner and what does she make of all this? Turns out the commissioner is Susan F. Cogswell, a former Travelers and Chase executive and nine-year veteran of the Torrington City Council. Her only news release this year is about a restitution agreement with Assurant Inc., in which the company admitted to wrongfully denying health claims, in ITP’s view, a serious breach of trust.
What’s interesting about Blumenthal’s response — that’s here: Blumenthal Press Release vs. Conn. DOI — apart from the fact that he makes a response, is that it utterly ignores protocol and criticizes his fellow regulator in the most explicit terms.
“After seven months of prodding and cajoling the DOI into action, Blumenthal said patients who complained to his office will likely get the benefits they are owed from Assurance Health.” He faults the deal for containing no penalties, with many heated adverbs:
“This order is tantamount to telling a thief to return stolen money — but imposing no punishment,” Blumenthal said. “Patients will finally get the benefits that we vigorously fought tenaciously to achieve for them, but this this order fails to impose the significant penalties warranted for Assurant’s abusive, anti-consumer practices. This step is a slap on the wrist — not even even a slap — and even worse may tie our hands in pursuing more aggressive legal action under insurance statutes.”
He noted a case in South Carolina, Mitchell v. Fortis, in which a jury imposed bad-faith penalties of $15 million against Assurant and the court found its conduct “highly reprehensible.”
Blumenthal says Commissioner Cogswell promised to do an an audit of Assurant, but instead delivered this agreement, no audit. The Assurant scenario will sound familiar to students of the UnumProvident case, in ITP’s view the worst/best insurance story in recent times, and that includes Katrina. Much more on Unum later.
And while it is true that Mississippi Attorney General Jim Hood’s lawsuits against insurers post-Katrina (go to the site and search under “Hood”) is an implicit slap at Commissioner George Dale, Blumenthal here takes the gloves off.
Thanks to The White Collar Maestra.