Hartford Reaches Settlement Over AD&D Policies

Hartford Life Insurance Company, a subsidiary of The Hartford Financial Services Group, agreed to give $24 million in premium credits to some 300,000 New York residents who bought the company’s accidental death and dismemberment (AD&D) policies.

It is part of a settlement reached between Hartford Life and New York State Department of Financial Services. The insurer will also be required to lower premium rates for existing and new enrollees by 45 percent.

The Hartford Financial Services Group spokesman Thomas Hambrick told Insurance Journal, “We worked closely with the New York Department of Financial Services throughout the review to determine an appropriate corrective action. We are pleased the matter is resolved.”

According to New York regulators, Hartford Life didn’t comply with the 60 percent minimum loss ratio (MLR) required under New York law for plans such as the insurer’s accidental death and dismemberment policies.

“Enforcing the rule about how much of premiums are spent on health care as opposed to administration and profit helps keep premiums down and ensures that most of what people pay actually goes to care,” said Benjamin Lawsky, New York State superintendent of financial services.

The MLR is the percentage of premium dollar that must be spent on claims. N.Y. regulators said Hartford failed to meet the 60 percent level because it overestimated the amount of money that would be spent to pay claims when the policies were priced by the insurer. An MLR is designed to prevent insurers from capturing excessive profits.

“Hartford reported the lower than required MLR to the Department of Financial Services and has submitted a corrective action plan. The insurer will reduce the premium and give premium credits to people already covered by the policies,” Lawsky said.

Under the corrective action plan, The Hartford will lower rates going forward by 45 percent for insured individuals and individuals who buy new policies. Additionally, the company will provide premium credits to currently insured individuals in the form of a 35 percent discount for 36 months. The aggregate credits will equal $24 million.

Topics New York