Minnesota will get a portion of what could become a $51 million nationwide settlement with National Union Fire Insurance Co., a Pittsburgh-based company accused of falsely marketing and misrepresenting its health and accident insurance policies.

The Minnesota Department of Commerce was one of five lead states to investigate National Union Fire Insurance, joining Ohio, Iowa, New Jersey and Pennsylvania. So far, 41 states have joined in the settlement agreement, but more could sign on before the Nov. 29 deadline.

National Union Fire Insurance, a division of AIG and Chartis Insurance, has agreed to pay an initial fine of $39 million but will add up to $1 million for each state and the District of Columbia to settle the matter.

Minnesota could receive up to $827,937, which includes a $50,000 bonus for its role as a lead investigator. The money will go to the state's general fund, according to a Commerce Department spokesman.

Officials in Ohio launched an investigation in September 2010 into alleged misconduct involving National Union's rate filing, policy fulfillment, licensing and vendor management between January 2008 and June 30, 2010.

The investigation focused on marketing and sales practices after National Union was said to be wrongly selling policies that covered accidents and sickness to individuals when the company was only licensed to sell such policies to groups.

National Union Fire Insurance officials did not return a call seeking comment.

It's difficult to determine how many policies were sold in Minnesota, according to the Commerce Department. Minnesota had about 1.53 percent of the total premiums collected on the disputed policies, according to the settlement agreement. The largest shares went to California (12 percent), Texas (7.6 percent) and New York (7 percent).

"I am pleased our investigators put a stop to these practices that did not comply with Minnesota law," Commerce Commissioner Mike Rothman said. "The department will continue to monitor this company to ensure their compliance with the agreed-upon corrective action plan."

In addition to the fine, National Union Fire Insurance agreed to improve its product licensing, claims and personnel training, including improved oversight of direct marketing efforts, such as its use of call centers, according to the settlement agreement.

Chartis, National Union's parent company, is a global property-casualty and general insurance organization, providing coverage to more than 70 million people.

Jackie Crosby • 612-673-7335