The Iowa Insurance Division has levied a $750,000 penalty against an insurance company but has ag... Firm fined $750000; reason

The Iowa Insurance Division has levied a $750,000 penalty against an insurance company but has agreed to keep secret whatever triggered the fine.

Conseco Life Insurance Co. agreed on March 21 to make a "full and complete settlement" of all matters relating to a pricing methodology it used in certain life insurance policies. That marks one of the insurance division's largest such penalties, but the settlement with the company stated that all records "shall be kept confidential."

The state, under insurance Commissioner Susan Voss, acknowledges that it investigated allegations that Conseco Life engaged in acts or practices that violated state laws or insurance regulations. Conseco denied any such violations.

But beyond mentioning that the division had investigated Conseco's use of an obscure "R-Factor" in some of its policies, the agreement did not spell out any specific accusation against the Carmel, Ind.-based company.

The insurance division's mission, according to its official state Web site, is to "protect consumers through consumer education and by effectively and efficiently providing a fair, flexible and positive regulatory environment."

"How can you fine somebody without alleging they did something wrong?" asked Joseph M. Belth, who is professor emeritus of insurance at Indiana University and editor of the Insurance Forum, a trade publication.

Robert Hunter, an insurance expert with the Consumer Federation of America, said that secrecy surrounding oversight of insurers is "scary stuff." He said consumers in Iowa and elsewhere stand to lose if one state won't share information with another state.

Policyholders in California have filed a class-action lawsuit that alleges that Conseco did not properly inform policyholders of negative effects of dropping the R-Factor. A $400 million preliminary settlement that could include about 1,000 Iowa policyholders awaits a judge's approval.

The agreement calls for a $725,000 civil penalty, which will be paid to the state's general fund, plus $25,000 to reimburse the insurance division for costs of the investigation.

The agreement between Conseco and the state expressly states that no final report of the division's examination would be filed. Such a record would be a public document.

Tom Alger, a spokesman for the division, said that terms of the deal prevented him from discussing what Conseco might have done to merit such a hefty penalty. He declined to say why the division entered into the agreement or give any other details.

In an advisory issued in 2004, Iowa Attorney General Tom Miller wrote that where state agencies are concerned, "all final orders, decisions and opinions must be available for public inspection with identifying details deleted only as authorized by law."

State Ombudsman William Angrick said he has seen few agreements between state agencies and the companies they regulate where details have been withheld. However, he said that in select instances state law does allow for such a shield.

Bankers Life & Casualty Co. paid a $110,000 civil penalty and agreed to send all 98 of its agents in Iowa to ethics classes after the state investigated their sales practices.

In the Bankers Life agreement, the division said the insurer's agents failed to identify themselves properly or tell consumers that the purpose of their visit to a home was to sell insurance. The division also said that Bankers Life, which specializes in sales to seniors, had engaged in high-pressure sales tactics.

The division then made 27 different demands for Bankers Life to educate agents, respond to complaints, and improve its record-keeping functions. It set specific deadlines for many of those duties to be carried out.

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