You may be in business with Unum whether you ever wanted to be or not. If you own a disability policy issued by Paul Revere Life Insurance Company, Provident Life and Accident Insurance Company, Unum Life Insurance Company of America, or National Life Insurance Company, your disability claim will be handled by Unum employees. Through a series of mergers and acquisitions over many years, Unum acquired all these companies and the policies they issued. Unum Group (formerly UnumProvident) and its affiliates collectively make up the largest underwriter of disability insurance in the world.
From the late 80s to the early 2000s, Unum’s subsidiaries wrote disability policies which contained features and pricing so favorable to the policyholder that they are no longer being sold anywhere or by any company. If you own one of these older policies, good for you – this is the best disability coverage ever sold. In fact, it is now well-documented that Unum’s subsidiaries under-priced these policies and ended up suffering financial losses as a result. In short, you got a great deal.
The problem now is that Unum does not always honor that deal. Unum eventually segregated these older policies into a business unit it calls “the Closed Block.” According to Unum Group’s 2009 Form 10k, at the beginning of 2004 it stopped selling any new policies into the Closed Block segment. Unum’s public filings also acknowledge that most of the Closed Block policies were “written on a noncancelable basis.” With a noncancelable policy, as long as the insured continues to pay the fixed annual premium for the policy’s duration, Unum cannot cancel the policy or raise the premium. The revenue side of the Unum Closed Block is therefore beyond Unum’s control. The only way Unum can affect or control the profitability of the Closed Block segment of its business is by “managing” the cost side of the equation (i.e., claims). Juries and courts have found that Unum’s “management” of these claims, and particularly claims for lifetime benefits, has run afoul of its duty to resolve claims in good faith.
These older Disability Income policies written by Provident, Paul Revere, and others commonly contain unique features such as lifetime benefits for disabilities caused by “Accident” as opposed to “Sickness.” Among other things, Unum has been found guilty of aggressively “managing” these claims by failing to acknowledge claims obviously caused by “accident,” thereby undermining the lifetime coverage the policyholder paid extra to obtain. Unum and its affiliates have been ordered to pay millions of dollars in bad faith damages in several different jurisdictions over these and other bad faith claim handling tactics. We have been hired in several cases involving precisely these issues.
In March of 2003, the Georgia Insurance Commissioner, John Oxendine, imposed a $1 million fine on UnumProvident and its subsidiaries over claims payment issues. In 2006, after a class action brought by the attorneys general of several states, Unum and its affiliates entered into a regulatory settlement agreement with all but two of our fifty states, requiring the disability giant to reconsider about 200,000 claims and pay a $15 million fine. Under that agreement Unum, its affiliates, and its employees promised to adhere to certain industry standards and to refrain from certain of its more aggressive claims management practices.
Despite the regulatory settlement agreements in the early 2000s, subsequent cases found Unum employees guilty of precisely the same kinds of conduct for which they had been sued and sanctioned in the first place.
If you are experiencing difficulty with your Unum, Paul Revere, Provident, or National Life claim, you need to call a lawyer who understands Unum’s history, structure, and practices, and who has the skill and resources to take on this corporate giant.