Minnesota insurance regulators are seeking to impose the state's largest-ever civil penalty — $10 million — against two subsidiaries of American Bankers Insurance Group (ABIG) for selling illegal insurance policies to more than 200,000 Minnesota residents.

Both American Bankers Insurance Co. (ABIC) and American Bankers Life Assurance Co. (ABLAC) are also charged with failing to provide information to the Minnesota Department of Commerce in violation of state insurance law and a 1998 consent order between ABIG and the department.

"This group of companies is not interested in obeying the law," says Jim Bernstein, commerce commissioner in Minnesota. "This is not a one-time mistake. There is a clear pattern of illegal behavior."

The record-breaking $10 million fine eclipses a fine of $688,776, which was levied against ABIG in 1998. ABIG has been penalized four times since 1993 for more than $900,000 in Minnesota, and company management has been the subject of no fewer than 66 disciplinary actions in several states. ABIG companies have been fined more than $15 million across the country since 1993.

"We believe that this matter was settled through the two consent orders entered into in 1998 and 2001, that the companies are endeavoring in good faith to implement the operational changes required in those orders, and that there is no basis for the commissioner to commence a new enforcement action," says Jim Sykes, a spokesperson for American Bankers.

Minnesota alleges that ABIC and ABLAC sold various unlicensed insurance policies, including accidental death, health, and disability policies, through direct-marketing campaigns after buying customer lists from lenders and retailers such as Ameriquest Mortgage Insurance Service, Chase Manhattan Mortgage Corp., Countrywide Insurance Services, Fleet Mortgage Group, GMAC Mortgage Group (a subsidiary of General Motors Corp.), Household Financial Services, and The Money Store.

The sale of unlicensed policies was first discovered by a market conduct examination by the Minnesota Commerce Department in 1998, and the "continuing pattern of noncompliance" since then has Bernstein seeking to revoke the insurers' licenses in addition to the fines.

American Bankers is committed to honoring it obligations to customers, paying claims, and keeping the promises it made when the insurance was purchased, says Skyes.

The Minnesota Commerce Department assures consumers that it will make sure that ABIC and ABLAC abide by the terms of their contracts.