Investigation Into Sale of Short-Term Health Policies Leads to $5 Million Settlement with HCC Life Insurance Company

Today the California Department of Insurance (CDI) reached a $5 million settlement agreement with HCC Life Insurance Company stemming from a multistate market conduct examination of HCC Life’s short-term health insurance business. As part of the $5 million multistate payment, California will receive just over $1 million.

“Market conduct exams help make sure insurers are fulfilling their obligation to policyholders and following all insurance laws and regulations,” said Insurance Commissioner Dave Jones. “Health insurance coverage can be complicated and consumers depend on their insurance company and agent to be honest about their coverage and its limitations.”

In a joint market conduct examination with 41 other insurance departments, CDI reviewed HCC Life’s marketing and sale of short-term health insurance products, and claim handling occurring under the policies. The joint market conduct examination identified deficiencies in these areas, which HCC Life agreed to address, in addition to making the settlement payment. HCC Life committed to auditing and improving oversight over all producers, general agents, third-party administrators and all other contractors or vendors that perform work on its behalf, and to complying with all state requirements for claim handling. Additionally, HCC Life will not market or sell any new short-term health policies for at least five years.

“Short-term health plans typically contain significant exclusions and do not contain all benefits required under the ACA,” added Commissioner Jones. “Insurance companies and producers that sell these products may not adequately explain these limitations at the time of sale, leading to consumer confusion and dissatisfaction. Examinations are frequently triggered by complaints from consumers, and we encourage any consumer who has concerns about their insurer or policy to contact the department for assistance.”

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