CIGNA Multistate Settlement

The insurance departments of CA, CT, MA, ME, and PA recently announced a settlement with the CIGNA companies that write disability business. The fines that were levied don’t amount to much; CA, MA and ME divvied up a total of $925,000. What is more concerning is the use of the terms of the 2005 agreement that UNUM entered into with 49 state insurance departments and the U.S. Department of Labor – terms that were themselves not included in any administrative code or regulations - as part of the standards used to evaluate CIGNA’s disability claim handling.

Insurers certainly need to be held accountable for their compliance with applicable state and federal laws regarding claims handling. But holding insurers accountable to arbitrary standards that are not a part of any duly enacted laws or regulations can begin to look like regulatory overreach. For this to occur with a major industry player for the second time in eight years seems to suggest a continuing trend whereby fundamental aspects of disability products are being dictated more by administrative bodies than by marketplace factors and forces.