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Gerber Life Insurance Co. to pay $1.1M for claims violations

A life insurance company has agreed to a $1.1 million penalty after North Carolina regulators found claims processing violations and delays, according to state Insurance Commissioner Mike Causey.

Gerber Life Insurance Co., which the Department of Insurance says entered a voluntary settlement agreement, also is paying $2.5 million in additional recoveries and interest to claimants.

An examination of 300 claims from over seven years revealed many violations with Gerber Life’s accidental death and dismemberment policies, a department news release late last week said.

Biological parents were initially denied benefits for children and had to send in clothing receipts and other unnecessary documentation to prove a parent-child relationship, according to the department. Some claimants had to sue for benefits, which meant attorneys’ fees lowered what they ultimately received, and the company didn’t pay interest on untimely paid claims.

Causey’s agency also said the examination found a third-party administrator that Gerber contracted to handle claims wasn’t licensed in North Carolina until almost three years after it began the work.

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