DCBS Media Release

November 25, 1998
For more information:
John Piper, (503) 947-7213

Oregon fines Florida insurance group

The Oregon Department of Consumer and Business Services has fined a Florida-based insurance group $197,594 as a result of a multi-state market conduct examination.

Oregon is one of 39 states that have jointly signed a consent order to resolve possible insurance law violations by American Bankers Insurance Group, Inc. (ABIG). The consent order was announced Monday by Kentucky Insurance Commissioner George Nichols III, who spearheaded the market conduct examination.

"We are pleased to be part of this cooperative effort to protect consumers in Oregon and the 38 other participating states," said Nancy Ellison, Oregon deputy insurance commissioner and administrator of the Insurance Division.

Five ABIG subsidiaries are licensed in Oregon to sell life, health, property and casualty insurance.

Ellison noted that Oregon had fined an ABIG subsidiary $20,000 in a separate action in December 1997 for selling a group life and disability policy that violated state law.

Nationwide, ABIG could face up to $15 million in monetary sanctions as a result of the multi-state agreement. The group must pay $12 million immediately and the remaining $3 million if it fails to abide by provisions of the consent order, which includes a detailed compliance plan covering such areas as licensing of insurance agents, handling of claims, and advertising.

In addition to the monetary sanctions, ABIG agreed to pay restitution to any policyholders who have been charged excess premiums, have had refunds improperly withheld, or have been denied appropriate claims payments.

"I believe this action is another example of the success that may be accomplished when state regulators communicate and work together to coordinate their efforts and focus on the issues facing consumers," Nichols said. "This cooperative effort would not have been possible without the assistance and support of the National Association of Insurance Commissioners (NAIC) and its staff."

David Gruenes, Minnesota's insurance commissioner, said, "This multi-state market conduct examination has been a coordinated approach of many states. The result reflects the commitment of state regulators to sound insurance regulation and consumer protection."

The compliance plan requires ABIG to provide monthly reports to the states on the progress of the plan. An on-site market conduct examination, made up of a team of representatives from a number of states participating in the action, will be initiated in November 1999. At that time, if the group fails to meet any part of the requirements of the individual states, it will be in violation of the agreement and the remaining $3 million will be forfeited.

"As state insurance commissioners, we are charged to enforce the law, and companies doing business in our states must comply with those laws," Nichols said. "I hope this will be a wake-up call to companies that we cannot tolerate disregard of the laws designed to protect the public."