Insurer fined $20M for lax practices

State insurance regulators have fined HealthMarkets Inc. $20 million following a market conduct exam that found fault with consumer disclosure and agent oversight. HealthMarkets’ affiliates, The Chesapeake Life Insurance Co. of Oklahoma City, and The Mega Life and Health Insurance Co. and Mid-West National Life Insurance Company of Tennessee, both of North Richland Hills, Texas, have also been named in the settlement, the National Association of Insurance Commissioners of Kansas City, Mo., said in a statement. The three-year examination involved 29 states and was led by Washington state’s insurance commissioner, Mike Kreidler, and Alaska’s insurance director, Linda Hall. The companies targeted sales to self-employed individuals and sold health plans through associations. Often, the agent or company didn’t adequately explain the health benefits. Under the settlement, HealthMarkets, also of North Richland Hills, must now send notices to holders who had their policies issued before Aug. 1, 2005, including contact information for clients who have questions about their coverage. HealthMarkets must also ensure that each method of communication is handled by someone who can give detailed information on policyholders’ coverage. The company must have a website with a “frequently asked questions” section. Finally, HealthMarkets must also report its progress on meeting improvement standards to the regulators twice a year through Dec. 31, 2009. The company faces up to $10 million in additional penalties if it doesn’t meet those standards.