The following is a discussion of some issues regarding INDIVIDUAL and ERISA DISABILITY insurance cases.
UNUM-PROVIDENT’S OWN OCCUPATION DISABILITY POLICIES
There have been a large number of own occupation disability insurance bad faith lawsuits between UNUM-PROVIDENT and its policy holders. Each case includes a combination of facts unique to the individual policy holder as well as broader issues involving company policy. Many of the suits filed include allegations of a corporate program to boost profits at the expense of a fair evaluation of policy holder claims.
The suits allege that UNUM aggressively marketed and sold insurance policies known as “own occupation” individual disability insurance policies. These polices were designed to be sold to highly compensated professionals such as doctors, senior executives and lawyers. Agents promoted these polices as income protection in the event the policy holder was unable to do the work in their own occupation. If a doctor could no longer practice as a heart surgeon but could do general office work they would still be considered disabled from their “own occupation”. In addition to insuring for specific occupations, these policies were non-cancelable and premiums could not be raised. The allegations state that due to competition in the market, UNUM and its predecessor companies reduced underwriting standards on, and under priced, this block of business. These policies became a significant problem for UNUM. In a 10-K report an UNUM predecessor company (Provident) described how it had underestimated its exposure on “own occupation” policies. It is also explained that its assumptions regarding interest rates had been incorrect and that it could no longer obtain high investment returns on the premiums it collected for these policies.
Many claims alleged deliberate plans to increase profits by reducing claim payments to solve this problem.
Some of the past practices investigated include claims that: