Minnesota Commerce Commissioner Jim Bernstein has charged American Bankers Insurance Company (ABIC) and American Bankers Life Assurance Company (ABLAC), both of Florida and both subsidiaries of American Bankers Insurance Group (ABIG) of Florida, with willfully violating Minnesota insurance law.
The charges are the product of a Department of Commerce Market Conduct Examination of the companies’ insurance activities in Minnesota.
Based on egregious allegations and a continuing pattern of non-compliance, Bernstein will seek to revoke the companies’ certificate to authority to sell insurance in Minnesota. In addition, Bernstein is seeking to fine the companies at least $10 million – the largest civil penalty ever imposed on an insurance company doing business in the state. The largest penalty to date is $688,776 – also paid by ABIG – in 1998.
ABIC and ABLAC have issued illegal insurance policies to more than 200,000 Minnesota residents, according to allegations contained in the Department of Commerce Statement of Charges. The companies are also charged with failing to provide information to the Department in violation of Minnesota insurance law and a 1998 Consent Order between the ABIG and the Department.
“This group of companies is not interested in obeying the law,” Bernstein said. “This is not a onetime mistake. There is a clear pattern of illegal behavior. These policies have not been reviewed and approved by the Department of Commerce, there is no guarantee that consumers will get what they thought they were paying for.”
The Department is also alleging ABIC and ABLAC management to be incompetent or untrustworthy by having been the subject of at least 66 other disciplinary actions imposed by Minnesota and other states.
In Minnesota, ABIG has been penalized four times since 1993.
ABIC and ABLAC sold various types of insurance, including accidental death, health and disability policies, through relationships with lenders and retailers doing business in Minnesota. ABIC and ABLAC obtained customer lists from these businesses and, through direct marketing, offered and sold insurance provided by ABIC and ABLAC. Some of the businesses include: Ameriquest Mortgage Insurance Service, Chase Manhatten Mortgage Corp., Countrywide Insurance Services, Fleet Mortgage Group, GMAC Mortgage Corp., Household Financial Services, and The Money Store.
The offer and sale of unapproved policies was first discovered during the 1998 Market Conduct Examination of ABIG. The Consent Order, signed by the company, contained violations for the use of these policies in Minnesota. ABIC and ABLAC allegedly continued to write business using the same unapproved policies and other policies not approved for use in Minnesota. The companies also reportedly continued to sell these policies, despite the assurance of ABIG’s President and CEO, P. Bruce Camacho that ABIG would comply with Minnesota law.
ABIC, licensed to conduct insurance business in Minnesota since 1960, collected $4.7 million of premiums from Minnesota residents in 2000. ABLAC has been licensed since 1955 and collected $6.9 million of premiums from Minnesotans in 2000.
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