OIR Alleges Life Insurance Companies Conducting Inappropriate Business Practices

The Florida Office of Insurance Regulation (“OIR”) today, May 8, 2008, issued an Order to Show Cause (“Order”) to two life insurance companies related to their solicitation of business from U.S. military personnel.

The OIR press release regarding the Order is reprinted below.

To view the Order, click here.

Should you have any questions or comments, please do not hesitate to contact this office.

 

Florida Office of Insurance Regulation Issues Order Alleging Inappropriate Business Practices to 2 Life Insurance Companies, American Fidelity Life and Trans World Assurance

TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced that the Office of Insurance Regulation (Office) has issued an Order to Show Cause to two life insurance companies related to their solicitation of business from U.S. military personnel.

The Order requires American Fidelity Life Insurance Co. (American Fidelity) of Pensacola, Fla., and Trans World Assurance Co. (Trans World) of San Mateo, Calif., to show cause why the Office should not enter a final order suspending or revoking their Certificates of Authority pursuant to Sections 624.418(2) or 626.9581, Florida Statutes, imposing appropriate penalties under the Florida Insurance Code and Florida Administrative Code, or taking other administrative actions as deemed appropriate by law.

“The Office will be vigilant to ensure that our dedicated military personnel are protected from predatory sales practices,” said Commissioner McCarty. “We will continue to vigorously enforce our regulations to prevent unfair and deceptive practices from being perpetrated on Florida residents.”

The following allegations against American Fidelity and/or Trans World are included in the Order:

• Sold insurance products to U.S. military personnel after providing free prizes and gifts valued at over $25;
• Employed a Corporal in the U.S. Marine Corps as a driver who used his military identification to gain access to the military base to pick up military personnel and take them to the companies’ offices;
• Offered to pay referral fees to U.S. military personnel who purchased their insurance products and introduced others who also purchased the companies’ insurance products;
• Did not provide complete contracts to U.S. military personnel who purchased insurance products;
• Misrepresented that they were affiliated with the U.S. military in the sale of their insurance products; and
• Required military personnel to grant access to their MyPay accounts to set up allotments for insurance products.

The Order is tied to a Rule that was adopted last September by the Florida Financial Services Commission that protects active duty service members of the U.S. Armed Forces from dishonest and predatory insurance sales practices in Florida.

The adoption of the Florida Rule followed the creation of a similar Model Law adopted by the National Association of Insurance Commissioners (NAIC) in June that states may adopt to prohibit the same behavior. Florida’s Rule, however, goes further than the NAIC Model Law in that it applies to every active duty service member, regardless of rank and has a broader definition of active duty than the NAIC model.

A copy of the complete Rule is available for your review.

If the companies fail to respond within 21 days from the issuance of the Order, the commissioner may seek one of the remedies noted in the second paragraph of this release.

 

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