Tuesday, June 9, 2009

Florida Department of Insurance Issues Show Cause Order Against Liberty National Life Insurance Company

On June 3rd, the Florida Department of Insurance issued an order for Liberty National Life Insurance Company to show cause why a final order suspending or revoking the Certificate of Authority currently held by Liberty National in the state of Florida should not be issued.

The Order arose out of a Market Conduct Examination which took place from June to November of 2008 at Liberty National offices in Birmingham, Alabama.

According to the Order, Liberty National was accused of unfair and deceptive conduct. Specifically, Liberty National is accused of discriminating against people solely because of the individuals national origin.

The order primarily involves individuals from Haiti who applied for insurance, but also addressed applications from individuals from Columbia, India, and Pakistan. The applications reviewed by investigators requested to know if the individual had lived in the United States for the last year. However, Liberty National had an underwriting policy that applicants born in certain countries would be rejected if they had resided in the United States for less than 10 years. This heightened underwriting standard applied to individuals from less developed countries. "This was in direct contrast to the written information provided to applicants as part of the application process that they must have resided in the U.S. for the past year to be eligible for life insurance coverage."

As a result, applicants were denied coverage based solely on their national origin.

Additionally, regulators determined that Liberty National represented a basis for denial as "information not received" which was a completely false and fabricated reason to cancel a policy when no actual reason existed. One underwriting file even contained a handwritten stating "Find a reason to cancel/decline. Info not received?"

For a complete copy of the report, contact Chris Hellums at Chrish@PDKHLaw.com