August 29, 2016
Missouri Department of Insurance fines insurer for charging Missourians for life insurance that would not provide any benefit
Jefferson City, Mo - The Missouri Department of Insurance's Division of Market Regulation investigated CMFG Life Insurance Company, formerly known as CUNA Mutual Insurance Society, for allegedly charging life insurance premiums to the accounts of individuals who had passed away. In many cases the joint borrower on the account continued to be charged the premium even after, in many cases, their spouse had died.
The company also continued to charge individuals life insurance premiums even after they reached their maximum age of 65, 66, 70 or 71 dependent on the policy.
"Consumers should not be charged a premium for a life policy they can no longer use due to an age limitation or death," said Missouri Department of Insurance Director John M. Huff. "This is a great example of how market conduct actions protect consumers. In this case, by ensuring consumers are not unknowingly charged premiums they do not owe for insurance they can no longer use."
The department believes that CMFG was improperly charging policyholders through its credit union members. CMFG sells insurance products to consumers through their member credit unions. In the settlement reached with the company, the department alleged that the company did not ensure proper procedures were in place to make certain that Missourians' accounts were not charged after they aged out of the policy or after they had passed away.
Furthermore, Missouri regulators allege that the company used inaccurate statements when reporting to the department. They reported that refunds had been paid to impacted members, but refunds had not actually been issued yet.
As part of the settlement, the company agreed to provide restitution to the estate or beneficiary of Missourians who were improperly charged premiums after their date of death.
CMFG has paid a voluntary forfeiture of $81,500 to the Missouri State School Fund. Additionally, CMFG will work with the department to provide their own internal review to ensure that all impacted members are accounted for and refunded.
To guard against being charged after reaching the maximum policy age, Missourians should read their insurance policy. A policy serves as a contract between the consumer and the insurance company. It is important to know the contract's limitations to avoid being unnecessarily charged. The consumer would have to ensure that no further deductions were made from their account after reaching the maximum age.
Missourians can protect their account and anyone that is on it, by informing family members before they pass away about the coverage they have and where deductions are made. Family members should be vigilant to ensure no deductions occur after death and if they do, the family member should contact the company immediately. For further assistance, Missourians are encouraged to contact the department by calling 800-726-7390 or by visiting insurance.mo.gov.
In market conduct exams and investigations, the Department of Insurance reviews insurance company practices regarding the treatment of policyholders. This includes the way premium rates are charged and claims are handled. These reviews can result in refunds for consumers, fines and corrections in business practices, as well as other remedies. Since the beginning of 2009, market conduct enforcement actions have generated more than $52 million in payments from insurance companies. The money goes toward refunds for consumers, general revenue and the Missouri State School Fund.
About the Missouri Department of Insurance, Financial Institutions & Professional Registration
The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.