Governor Andrew M. Cuomo announced today that Aetna Life Insurance Company will pay a $500,000 penalty for consumer protection violations. A Department of Financial Services (DFS) investigation found that Aetna repeatedly used policy forms that violated New York Insurance Law for certain group life insurance policies and failed to inform policyholders of the rights and benefits guaranteed under those policies.
Making sure that policyholders know what they are paying for is a bedrock consumer protection requirement, Governor Cuomo said. "Our administration will continue our work to ensure that consumers are fully informed of their rights and insurance companies meet their obligations.
Benjamin M. Lawsky, Superintendent of Financial Services, said, When insurance companies fail to comply with their consumer protection requirements, it can prevent New Yorkers from making informed choices. We will take action whenever insurers leave consumers in the dark about their rights and benefits.
A DFS investigation uncovered that Aetna had used noncompliant consumer policy forms between 2002 and 2011 for six group life insurance policies. Consequently, during that period, Aetna failed to inform the insured policyholders of all rights and benefits under those policies.
One such undisclosed benefit included the right for a longer period than was disclosed in the policy forms of an individual within a group policy to continue their coverage under an individual policy in the event the group policy is canceled. In other words, a consumer may not be aware of that benefit and may not take advantage of it.
To view a copy of DFSs agreement with Aetna, please visit http://www.dfs.ny.gov/about/stip/stip-20140416-aetna.pdf.