November 30, 1998
FOR IMMEDIATE RELEASE
CONTACT: CHRISTOPHER GOETCHEUS
Division Of Insurance To Receive Nearly $400 Thousand From American Bankers In Nationwide Settlement
(BOSTON, MA)The Massachusetts Division of Insurance (DOI) announced today that it will receive $395 thousand from American Bankers Insurance Group, Inc.(ABIG) resulting from its participation in a multi-state nationwide market conduct examination of the Miami, FL-based insurer's business practices.
Massachusetts DOI initiated its investigation of ABIG in July of 1997, in response to a complaint that an unlicensed retailer was soliciting credit insurance covering the outstanding balances on credit cards offered by the retailer. The inquiry revealed that two subsidiaries of ABIG, American Bankers Insurance Company of Florida and American Bankers Life Assurance Company of Florida, underwrote this credit insurance and indirectly paid commission to an unlicensed entity in violation of the Massachusetts insurance laws.
During the course of the investigation, the DOI's Market Conduct section also discovered that ABIG compensated another unlicensed retailer in a similar arrangement offering credit insurance. ABIG's relationship with (19) other retailers or business entities continues to be monitored by the Market Conduct section.
MA Insurance Commissioner Linda L. Ruthardt praised the joint efforts of her peers in (38) other states in working together to ensure regulatory compliance in Massachusetts and within the borders of states where ABIG was engaged in similar business practices. Ruthardt credited her Market Conduct section for identifying the alleged violations early on. "A member of our team actually saw the credit insurance fliers while shopping. His curiosity and the section's diligence paid off. These results ultimately protect consumers and the licensed agents who advise them," Ruthardt said.
As part of the settlement, ABIG has agreed to a compliance program that will include modifying its business procedures in accordance with Massachusetts insurance laws. ABIG will provide monthly reports to the DOI on the progress of the program. In November of 1999, a team of representatives from several states participating in the settlement will undertake an on-site market conduct examination of ABIG. If ABIG fails to meet any of the compliance program requirements of Massachusetts or other participating states, they would be subject to an additional $3 million fine.
ABIG is licensed to write insurance policies in all (50) states and offers a variety of insurance products in Massachusetts with written premiums totaling $22 million.