Minnesota Commerce Commissioner Jim Bernstein announced that Hurley State Bank of Sioux Falls, South Dakota has paid a civil penalty and investigative costs totaling $300,000 as a result of the Department’s continuing investigation into the sale and marketing of credit insurance to Minnesota consumers. The Commissioner’s Consent Order also requires Hurley to offer an estimated $159,000 in refunds to more than 4,500 Minnesota consumers who have purchased credit insurance or have been covered by a credit insurance policy since July 1999.
As Minnesota’s insurance regulator, the Department of Commerce is alleging that some Hurley customers were charged for credit insurance policies that they did not want or did not sign for. In addition, Hurley was reportedly acting as an insurance agency without a Minnesota license.
Hurley State Bank issues credit cards for a number of retailers doing business in Minnesota.
The insurance policies sold by Hurley and its retailers were issued by American Bankers Insurance Group (ABIG) of Florida. In Feb. 2002, the Department issued a Statement of Charges against ABIG citing a continuing pattern of non-compliance and multiple violations of Minnesota insurance law. Commissioner Bernstein is seeking sanctions and significant civil penalties against ABIG. A hearing is pending. Hurley has agreed to cooperate with the Department in its ongoing investigation and enforcement actions against ABIG.
Hurley and ABIG have entered into an Insurance Services Agreement. Hurley agrees to bill and collect credit insurance premiums and then remit them to ABIG. In return, ABIG is responsible for complying with Minnesota law. However, the insurance forms designed by ABIG and distributed by Hurley reportedly do not include basic coverage information nor are they separate from the billing statement as required by law. The forms have not been filed or approved by the Department.
On billing statements, customers found charges for “CHARGEGARD 3000 / CREDIT PROTECTION.” These charges were for credit insurance premiums. Customers were confused because “insurance” or “credit insurance” was reportedly not mentioned.
Hurley, while not admitting or denying the Department’s allegations, has paid a civil penalty and investigative costs totaling $300,000, will offer refunds to Minnesota consumers who have purchased or have been covered by credit insurance since July 1999, and will cease selling credit insurance to Minnesota customers until it complies with Minnesota insurance law.
The Department is continuing its investigation of the sale and marketing of credit insurance:
In November 2001, Commissioner Bernstein announced a settlement with Circuit City of Richmond, VA. Circuit City – while not admitting or denying any guilt – paid a civil penalty of $335,000 stemming from the sale of credit insurance at their 10 Minnesota stores. Circuit City also offered premium refunds to customers who purchased credit insurance in the previous 2 years.
In November 2001, Commissioner Bernstein charged the Zale Corporation, Irving, Texas with allegedly violating numerous Minnesota insurance laws. The 195 count Statement of Charges includes allegations involving the sale of credit life and credit disability insurance policies to Minnesota consumers. A hearing is pending
In February 2002, the Department issued a Statement of Charges against American Bankers Insurance Group (ABIG) of Florida alleging a continuing pattern of non-compliance and multiple violations of Minnesota insurance law. Commissioner Bernstein is seeking sanctions and significant civil penalties.
In May 2002, the Department announced a $125,000 civil penalty against American General Assurance Company of Schaumburg, Illinois. The company reportedly failed to pay at least 85 claims in a timely manner and did not pay interest on money it owed to policyholders on 17 of those claims.
In May 2002, the Department announced that JMIC Life Insurance Company of Deerfield Beach, FL, Union Security Life Insurance Company of Atlanta, GA, and Universal Underwriters Life Insurance Company of Overland Park, KS have been ordered to appear at separate hearings to determine if the Commissioner should withdraw approval of the premium rates. An actuarial review determined the premium rates currently being charged to Minnesota consumers are excessive when compared to policy benefits.
Was this article valuable?
Here are more articles you may enjoy.
JPMorgan Client Who Lost $50 Million Fortune Faces Court Setback 
FBI Says Chinese Hackers Preparing to Attack US Infrastructure 
Survey Shows Majority of Florida, California Homeowners Seeing Higher Insurance Costs 
North Carolina Adjuster and Son Charged With Embezzlement in Roof Jobs 
