UNUM Provident Story on 60 Minutes & Dateline

November 21, 2002

You may have seen or heard about the above television segments aired recently which were highly critical of UNUM Provident. Since you have either long term care or disability coverage with this company, we wanted to give you a little more information about what we see and what we will be doing to watch this situation for you.

The shows focused on the claims denials or closures for Unum Provident disability insurance and did not address long-term care. Unum and Provident used to write very comprehensive disability policies for highly paid professionals like doctors and lawyers. The policies specifically covered the "inability to perform the duties of your regular profession". These were and are highly desirable policies because they would pay benefits even if the owner could work in another profession. Often the monthly benefit amounts are quite high.

Claims rates were higher than the company had anticipated, and new policies no longer have the same comprehensive definition of disability. Many policy holders filed claims, legitimately, even though they were able to live active lives, living on the generous income from their disability policies.

Here are some of the issues discussed on the shows. UNUM Provident has been accused of setting targets to close claims and former employees stated that some of the claims they closed were valid claims. The company denies that there are targets.

The programs reference 3000 lawsuits over a period of five years. During that period there were 2 million claims. Of the lawsuits filed, the company prevailed in three out of four.

In the case of John Tedesco, the eye surgeon referenced in the program, 60 Minutes, the company says that the original claim for Dr. Tedesco followed an injury to his back from lifting a golf cart. He subsequently recovered from that injury, but chose to close his practice. The company claims that it never denied a claim based on Parkinson's disease, a fact known by 60 Minutes, but not disclosed.

The company states that 98% of claims filed are paid, a rate consistent with past experience.

As is often the case, there are two sides to this story. We prefer not to assume that either position is right. We will continue to monitor UNUM Provident and their claims payment experience.

We think that the public scrutiny that will result from these television shows will probably result in better oversight on behalf of consumers.

We have seen that it is much more difficult to file and collect for a disability claim today than it was ten years ago, no matter which company has issued the policy. If we feel that you are at risk or that your coverage needs to be changed, we will let you know immediately. For now, we have requested additional industry information and will continue to monitor this situation.

Please call if you have any questions.

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