 |
Disability insurer settlesPosted by Retirement on: 2005-10-04 07:14:07 in category:
Business [ Print | Permalink / 0 Comment(s) ] Oct. 04, 2005 REQUIRED POLICY REWRITE COULD EVENTUALLY BE APPLIED TO ALL PROVIDERS By Matthai Chakko Kuruvila Mercury News California Insurance Commissioner John Garamendi Monday announced a settlement with the nation's largest disability insurer, slapping it with an $8 million fine and allowing roughly 26,000 Californians to reopen claims against the company. As part of the settlement, UnumProvident will rewrite its disability policies to give all of its California policyholders more leverage in negotiating with the company over what constitutes a ``disability'' and in medical reviews of injuries. The insurance department found 25 different violations of California law by Chattanooga,Tenn.-based UnumProvident, which settled without admitting guilt. But the settlement's impact isn't limited only to UnumProvident customers, whose policies would be with the company's subsidiaries: Unum Life, Provident Life & Accident and Paul Revere. New rules Garamendi said that all insurance companies issuing disability policies in California would eventually have to abide by the new rules, giving consumers greater negotiating power in their claims. Among the proposed rules are prohibitions against insurers having sole discretion to interpret policy language and against excluding pre-existing conditions from ``contributing to'' disability status. Garamendi said the new policy rules would ``set the pace'' for disability insurance ``across the nation.'' But UnumProvident, which has roughly 50 percent of the national market with 25 million policyholders, said Garamendi's approach is too broad. The stricter standards would ultimately erode benefits and coverage for consumers while raising costs for employers, said Mary Clarke Guenther, a spokeswoman for UnumProvident. Disability insurance typically covers a portion of the lost income of those who are stricken with illness or injury. Most people obtain such insurance through their workplace, though some pay for it independently. Because a broader group of people would be covered under such policies, Guenther said premiums would have to rise to cover costs, unless the amount of the benefits was reduced. With employers already facing record costs for health care and worker's compensation, Garamendi's proposed rules will be an unwelcome added burden, Guenther added. Nonetheless, Guenther said that Monday's settlement ``is going to change the landscape in California for disability carriers.'' The settlement stems from an insurance department investigation into three years worth of UnumProvident claims. Roughly one-third of the 1,000 claims reviewed included elements of wrongdoing by the company, the insurance department said. The wrongdoing included mischaracterizing work responsibilities, ``knowingly'' applying inaccurate definitions of ``total disability,'' and selectively using ``independent medical exams, medical records or other medical findings to the company's own advantage,'' according to the department. Allegations denied Garamendi's office said UnumProvident's subsidiaries wrongly defined the nursing profession as ``sedentary'' in evaluating disability claims even though nurses lift patients or do other manual labor. Overall, the company classified injuries as ``total disability'' only in cases in which the worker wasn't able to do every single aspect -- as opposed to the vast majority -- of their job, Garamendi said. Garamendi called UnumProvident an ``outlaw operating beyond the bounds of what any company is allowed to do.'' Guenther, the UnumProvident spokeswoman, disputed the charge. ``We vehemently deny the allegations that are coming out of the Department of Insurance,'' she said. ``We think the rhetoric is inconsistent with the facts.'' UnumProvident's policyholders file fewer claims than the industry average, according to the National Association of Insurance Commissioners, which provides the data on its Web site. ``These numbers,'' Guenther said, ``do not reflect the kind of organization that Commissioner Garamendi attempts to paint.'' Homepage Other open community sites http://www.business-business.biz Please support our sponsors: To design your custom retirement plan. http://www.retirement-plan.us For planning IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management- Nationally ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
|
Post new CommentThis site does not allow anonymous comments. Registered members can login to participate. Registration is free and takes only a few seconds |
|