Conseco concedes errors

Conseco and the Florida Office of Insurance Regulation (FOIR)
have agreed to enter into discussions to resolve a particularly
unpleasant situation the US life insurer finds itself in.
Discussions relate to serious accusations leveled against Conseco
Life by the FOIR in December 2008.

The FOIR’s accusations relate to the insurer’s Lifetrend
universal life product and include mismanagement and withholding
information from the FOIR which has threatened Conseco with
suspension or revocation of its licence to operate in the
state.

According to the FOIR, a key issue was Conseco’s notification of
5,000 Lifetrend policyholders in October 2008 informing them of an
increase in their “monthly cost of insurance rates and expense
charges.”

In November last year, 4,500 of the policyholders were also told
that their policies were under-funded and that they must submit
payments for the “shortfall” no later than 3 January.

The FOIR’s accusation of mismanagement appears supported by a
response published by Conseco.

“Due to an administrative platform issue at Conseco Life, some
policyholders, over a period of years, paid lower premiums, or no
premiums, because they did not receive notice that additional
premiums were due,” stated Conseco which stressed that no
policyholder received diminished benefits under their contract
because of the company’s error.

Conseco added that it has brought the issue to the attention of
regulators, is working to correct it, and with concurrence of
Conseco Life’s home-state regulator, the Indiana Department of
Insurance,
has implemented a 90-day nationwide moratorium on further action on
Lifetrend policies.

Conseco and the FOIR have also agreed to enter discussions
regarding issues related to Lifetrend policyholders resident in
Florida.