Unum 2015 Annual Report Download - page 161

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Unum 2015 Annual Report
Claims Handling Matters
We and our insurance subsidiaries, in the ordinary course of our business, are engaged in claim litigation where disputes arise as a result
of a denial or termination of benefits. Most typically these lawsuits are filed on behalf of a single claimant or policyholder, and in some of
these individual actions punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims. For our general
claim litigation, we maintain reserves based on experience to satisfy judgments and settlements in the normal course. We expect that the
ultimate liability, if any, with respect to general claim litigation, after consideration of the reserves maintained, will not be material to our
consolidated financial condition. Nevertheless, given the inherent unpredictability of litigation, it is possible that an adverse outcome in
certain claim litigation involving punitive damages could, from time to time, have a material adverse effect on our consolidated results of
operations in a period, depending on the results of operations for the particular period.
From time to time class action allegations are pursued where the claimant or policyholder purports to represent a larger number of
individuals who are similarly situated. Since each insurance claim is evaluated based on its own merits, there is rarely a single act or
series of actions which can properly be addressed by a class action. Nevertheless, we monitor these cases closely and defend ourselves
appropriately where these allegations are made.
Miscellaneous Matters
Beginning in 2011, a number of state regulators began requiring insurers to cross-check specified insurance policies with the Social
Security Administration’s Death Master File to identify potential matches. If a potential match was identified, insurers were requested to
determine if benefits were due, locate beneficiaries, and make payments where appropriate. We initiated this process where requested,
and in 2012 we began implementing this process in all states on a forward-looking basis. In addition to implementing this on a forward-
looking basis, in 2013 we began an initiative to search for potential claims from previous years. During 2013, we completed our assessment
of benefits which we estimate will be paid under this initiative, and as such, established additional reserves for payment of these benefits.
Similar to other insurers, we are undergoing an examination by a third party acting on behalf of a number of state treasurers concerning our
compliance with the unclaimed property laws of the participating states. We are cooperating fully with this examination, as well as with a
Delaware Market Conduct examination involving the same issue. The legal and regulatory environment around unclaimed death benefits
continues to evolve. It is possible that the current examination and/or similar investigations by other state jurisdictions may result in
additional payments to beneficiaries, the payment of abandoned funds under state law, and/or administrative penalties, the total of which
may be in excess of the reserves established.
In December 2012, State of West Virginia ex rel. John D. Perdue v. Provident Life and Accident Insurance Company and State of West
Virginia ex rel. John D. Perdue v. Colonial Life & Accident Insurance Company were filed in the Circuit Court of Putnam County, West Virginia.
These two separate complaints alleged violations of the West Virginia Uniform Unclaimed Property Act by failing to identify and report all
unclaimed insurance policy proceeds due to be escheated to West Virginia. The complaints sought to examine company records and assess
penalties and costs in an undetermined amount. In December 2013, the court dismissed both complaints, holding that the West Virginia
Uniform Unclaimed Property Act does not require insurance companies to periodically search the Social Security Administrations’ Death
Master File or escheat unclaimed life insurance benefits until a claim has been submitted. In January 2014, the plaintiff appealed the
dismissal of both complaints. In June 2015, the appellate court reinstated the case, holding that the West Virginia Uniform Unclaimed
Property Act requires insurers to make reasonable efforts to determine whether their insureds are still living. The case was remanded to
the trial court where we answered the complaints.