Market Conduct Corner: State regulators seal up 2021 with fines of a few million for some life & health insurers: UnitedHealthcare, Athene & Pacific Life

Jan. 8, 2022 — Pacific Life Insurance Co., UnitedHealthcare Group and Athene Annuity and Life Co. are three life or health companies that resolved market conduct issues with state regulators toward the end of 2021.

The New York Department of Financial Services fined Pacific Life (PLIC) $3 million in mid-December following an investigation that began in May 2019. The NY DFS found that Nebraska-based PLIC had been conducting pension risk transfer business in New York without a specific state insurance license. Pacific Life transitioned its transactions to use its New York-licensed affiliate Pacific Life & Annuity Co.(PL&A)  to cover New York participants through the launch of a two-group annuity contract structure with PLIC and PL&A for future PRT transactions, according to the consent order. It is thus migrating state participants to a PL&A annuity contract.

The DFS wrote that the continues to work with Pacific Life as it regards these New York group annuity participants. New York reminded in the consent order that its rules make clear that if a company is not specifically licensed in the state, it cannot make telephone calls, engage in any other manner of communication with any person in New York from outside New York, other than by mail note solicit, negotiate, or sell group annuity contracts through in-person meetings, telephone calls, mail, emails, access to web portals, or any other form of communication from a location in New York.

New York state insurance regulators continue to look at PRT transactions and the companies involved in taking on these contracts. For details, see: https://www.dfs.ny.gov/system/files/documents/2021/12/ea20211221_co_pacific_life.pdf

In Texas,Hartford-based United Healthcare and its affiliated companies, including UnitedHealthcare of Texas, Inc., were penalized $2.6 million by the state Department of Insurance in mid-November for various violations, many of them administrative or time-sensitive calendar violations uncovered in an exam. Many appeared to revolve around the time constraints involved in issuance of adverse determinations of claims and their reviews. The affiliated companies, which also include National Pacific Dental and Golden Rule Insurance Co., were included and NPD also paid $200,000 for violations found in the exam, which regulators say included repeats from a previous exam.

The companies agreed to come into compliance to address the violations found during these triennial examinations and to not issue policy forms to Texas consumers that are different from the forms filed with and approved by TDI. For more details, see: https://www.tdi.texas.gov/commissioner/disciplinary-orders/documents/20217092.pdf 

UnitedHealthcare and its three affiliates must each report to TDI on or before Jan. 31, 2022 to show how they are implementing their corrective plan for each exam.

Athene Annuity and Life also recently agreed to civil forfeiture of $30,000 in Illinois for violations in certain areas relating to accuracy or timeliness, sometimes surrounding communications with beneficiaries involving claims.

A wide-ranging state market conduct exam often found categories of business transactions where no violations were found. The Illinois Department of Insurance wrote that it had received Athene’s proof of compliance on Nov. 29, 2021. Examiners reviewed at producer licensing, claims and complaints . covered the business from May 1, 2018 through April 30, 2019 for claims, and Nov. 27, 2017 through April 30, 2019 for complaints/appeal file review. For details, see: https://www2.illinois.gov/sites/Insurance/Reports/Reports/Athene_Web_Report_11-29-2021.pdf 

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