NU Online News Service, Aug. 12, 12:14 p.m. – Minnesota insurance regulators have accused United American Insurance Company of Delaware, McKinney, Texas, of violating Minnesota laws that govern the sale and marketing of Medicare supplement, or "Medigap," insurance policies.
The Minnesota Department of Commerce, which regulates insurers in Minnesota, says United American used frightening, misleading lead cards and directed its agents to say they were calling consumers on behalf of "United American Health Services," rather than disclosing that they were in the business of insurance.
The Minnesota department has also accused United American of misrepresenting the United American policies' benefits; failing to determine whether the new policies sold were suitable for the purchasers; failing to comply with state laws that required it to offer an "extended basic" plan that included prescription drug benefits; and paying commissions that were structured to promote "churning," or the replacement of existing Medigap policies without a substantial favorable difference in cost or benefits.
United American paid its agents high commissions in the first four years that a policy was in effect, the Minnesota department says.
Minnesota department officials argue that paying higher commissions in the early policy years gives agents an incentive to churn existing policies.
