California Insurance Commissioner Labels Unum
an “Outlaw” Insurer as the California Department of Insurance Fines Unum $8 Million

When the insurance commissioners of 48 states agreed to a $15 million multi-state settlement last year against Unum, California Insurance Commissioner John Garamendi rejected the settlement, stating that it did not go far enough to protect California insureds.  This week, the California State Department of Insurance instead fined Unum $8 million, the largest settlement in the agency’s history, with Garamendi calling Unum an “outlaw company” that harmed consumers by denying their disability claims.

This company engaged in a strategy to increase its bottom line at the expense of its customers. — California Insurance Commissioner John Garamendi

State regulators determined that UnumProvident misinterpreted job classifications, improperly overruled doctors’ opinions and knowingly used incorrect insurance definitions to avoid payment of disability benefits owed to insureds.

While the multi-state settlement required Unum to reopen 215,000 claims and pay a fine of $15 million, the $8 million California settlement includes a third-party review by insurance experts, limits the discretion insurers have to interpret policy language and establishes a model policy that Unum and other disability insurers will be required to adhere to in California.