Florida Settles With Coventry As New York Judge Cuts Charges

The Florida OIR said it agreed to a settlement because the firm cooperated with its investigation into charges of fraudulent practices, including paying brokers not to place competitive bids on policies it was seeking to buy from policy holders.

Although the OIR imposed no fines or penalties on Coventry, the company agreed to pay $1.5 million to cover costs of the investigation and examination. Coventry also agreed to adopt a plan to improve its business practices, including disclosure of compensation paid to any intermediaries involved in a settlement if the insured requests it, according to the consent order.

The firm also agreed to support the OIR's proposed rule designed to require settlement firms to improve disclosures to consumers and to enhance regulation of the industry in the state.

Among other conditions, the proposed rule would require all viatical settlement firms operating in Florida to identify to clients each broker that receives compensation and any compensation paid to each as part of a settlement.

Coventry also consented to an annual audit for the next 2 years, conducted by an independent firm selected by the OIR, to verify it complied with the order. It also agreed to submit quarterly reports to the OIR listing the total number of transactions it handles involving Florida consumers.

Moreover, Coventry agreed to provide an hour of training to each of its employees about its business enhancement plan.

For its part, the OIR said it intended to try to make the consent order the basis of a regulation governing all viatical settlements in the state.

The order charged Coventry with a number of breaches of Florida's insurance code, including inconsistencies between an insured's medical records and statements on an insurance application.

Alan H. Buerger, CEO of Coventry, notes the company admitted to no wrongdoing. He insisted, too, that his firm reports any evidence of insurance fraud to Florida regulators.

Coventry has purchased more than 5,000 life policies since 2001, paying more than $1.2 billion above what recipients would have received from their carrier for their policies' cash surrender value, Buerger said.

Ultimately, the Florida settlement would be "terrific for the industry" by promoting improved regulation and "setting the bar for increased transparency and consumer protections," he said.