Conseco Life Insurance Co. agreed to establish a $10 million fund and pay a $1 million “monetary assessment” to settle a multi-state complaint regarding its handling of policy increases for its Lifetrend product in 2008.

Kevin McCarty

Florida Insurance Commissioner Kevin McCarty announced the voluntary settlement among 37 jurisdictions and Conseco.

CNO Financial Group Inc., parent company of Conseco, acknowledged the settlement in a statement June 30.

The Florida Office of Insurance Regulation led the multi-state effort, working closely with insurance regulators from California, Iowa, Indiana, and Texas, regarding the sale and administration of the Lifetrend policies. Officials began a review after receiving complaints from consumers who had received notices in the fall of 2008 regarding increases in policy costs.

In a letter to its policyholders, the company said “administrative issues” that prevented it from notifying them previously about any shortfalls that needed to be corrected have been resolved, according to the South Florida Business Journal. The letter, according to the report, provides policyholders with 60 days to fix any shortfall before the policy is put on its Nonforfeiture Provision of Continuation of Insurance.

Exactly 12,247 Lifetrend policies remain in force, according to McCarty’s statement on the settlement. About 4,300 of the policies are owned by Florida residents.

The settlement agreement requires Conseco Life and its affiliates – Conseco Insurance Co., Conseco Health Insurance Co., Bankers Life and Casualty Co. and Washington National Insurance Co. – to improve their processes for identifying and correcting administrative system issues. A two-year process improvement monitoring period also was included in the settlement agreement, officials said.

Conseco will notify consumers of the settlement, beginning mid-July and continuing through the end of the year, and the insurer will establish a dedicated toll-free number for Lifetrend policyowners to call the company with their questions, according to McCarty’s statement.