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Sunday, November 21, 2004

UNUMProvident pays $15 million fine

“Where were you when I needed you? Where were you when I wanted you?
-The Grass Roots

When someone is sick or injured, they need and want their disability insurance company to pay them fairly and promptly.

People buy that type of insurance to keep money coming in when they can’t make it to work.

As Yogi Berra says, “When your hurt, it won’t hurt to miss work.”

That is why a minor story in the Wall Street Journal was a major one for me. It should have been front page news.

UNUMProvident Insurance company settled an investigation with regulators from all 50 states over the way they have been handling their claims. You can read about it on their web site at

UNUMProvident agreed to pay a $15 million fine and to re evaluate over 200,000 claims where people were not given money. If they don’t get their act together in the next two years, they could be fined another $145 million more.

UNUMProvident is the largest company that sells disability insurance. The company merged some of the biggest names in the disability insurance business like UNUM (previously called Union Mutual), Provident and Paul Revere.

Early in my financial planning career, I got several of my clients to buy disability insurance. Most of them bought their insurance from the companies that now make up UNUMProvident.

I set up plans for individuals, law firms and groups of doctors. I even purchased a policy from Union Mutual for myself and my employees.

Back then, the companies had a reputation for honesty. When I caught pneumonia and was off work for two months, Union Mutual paid my salary. I did not need state regulators to make them.

I am glad that I have not been sick recently as it looks like UNUMProvident is making people battle to get what is owed them.

The company is jerking around injured people. These people, or the companies the people worked for, paid UNUMProvident a lot of money to have insurance. UNUMProvident needs to hold up their end of the bargain.

The settlement said they were going to look at over 200,000 different claims, a huge number. That is three times the number of people who live in Madison County.

People with long term disabilities can’t work and probably don’t have other income. These people counted on UNUMProvident to pay part of their salaries and may be pushed to the edge financially.

I wonder how many bankruptcies UNUMProvident caused by not paying claims fairly? How many divorces, suicides and lives ruined because this particular insurance company failed to do what their clients paid them to do?

These injured people were already sick. The stress of fighting with an insurance company had to make their illnesses worse. It certainly did not help them get better.

UNUMProvident hurt people who trusted their company. You are in bad shape when the regulators from 50 states crack down on you. Companies don’t agree to fork over $15 million, with the possibility of being fined $145 million more, without some really good reasons.

I’m also angry that I encouraged my clients to do business with their companies.
Although I really feel sorry for those injured people who have been harmed by UNUMProvident, I also feel sorry for those insurance agents who sold their plans.

Insurance agents live and die by their reputation for knowledge and honesty. When an agent or financial planner makes a recommendation, they put that reputation on the line. These agents believed that UNUMProvident offered the best services and that UNUMProvident would be there when their clients needed them.

UNUMProvident needs to think about those agents who trusted their company. The agents spent their lifetimes developing their reputations and relationships.

There are a lot of injured people, and insurance agents asking UNUMProvident, Where were you when I needed you?

UNUMProvident needs to find an answer to that question.

Don McNay is President of McNay Settlement Group in Richmond. He is a lifetime member of the Million Dollar Round Table and one of his two masters degrees is in financial services. He is a Chartered Life Underwriter (CLU) and a Chartered Financial Consultant (ChFC). You can write to him at or read other things he has written at