Conseco receives cease-and-desist order
The Iowa Insurance Division today issued a cease-and-desist order to Conseco Life Insurance Co. after receiving complaints from Conseco customers who hold universal life insurance policies.
According to a release, Conseco has been demanding additional payments – some totaling thousands of dollars – from 168 universal life policyholders in Iowa, claiming the policies were maintained without sufficient premium payments due to an internal administrative error.
In a letter sent to its customers last month, and in a follow-up letter last week, Conseco told policyholders it would cancel their policies if additional payments were not received by Jan. 4, 2009. Tom Alger, communications director for the Insurance Division, said 60 claims were filed against Conseco with the division.
“This attempt to lay the consequences of the company’s error on the backs of its customers after years of assurance that the policies were in order is intolerable,” said Susan Voss, commissioner of Insurance Division. “We tried to work with the company to get them to cooperate in withdrawing their demands. Their refusal to do so now requires our immediate administrative action. We simply can’t leave these customers agonizing over this unplanned expense, especially in these troubled economic times.”
Conseco inherited the universal life policies, which were originally issued by Philadelphia Life Insurance Co. and Massachusetts General Life Insurance Co., when it acquired the two companies in the ’90s, Alger said.
Angel Robinson, Iowa’s new consumer advocate for insurance, sat in on meetings held this past weekend between the Insurance Division and Conseco and said she was appalled by Conseco’s “blatant attempt to take advantage of its Iowa policyholders. This company could have chosen to do the right thing … but has refused, leaving legal action as recourse.”
The cease-and-desist order takes effect immediately, and Conseco has the right to a hearing within 30 days of the order.