Florida Office of Insurance Regulation Resolves Military Sales Practices Litigation – Insurers to Pay Fines and Policyholder Refunds
Dec 29, 2009
The Florida Office of Insurance Regulation (“OIR”) announced today, December 29, 2009, that it has entered into consent agreements with two insurers who violated Florida’s Military Sales Practices Rule by selling non-compliant Flexible Dollar Builder Life Insurance Policies to active duty service members of the United States Armed Forces.
As result of an investigation conducted by the OIR, insurers American Fidelity Life Insurance Company and Trans World Assurance Company have been ordered to pay a combined $250,000 in penalties, costs and fees and provide affected policyholders with refunds.
A press release from the OIR about the Military Sales Practices Rule violations is reprinted below.
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Florida Office of Insurance Regulation Resolves Military Sales Litigation – Insurers to Pay $250,000 and Give Refunds to Policyholders
TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced the Florida Office of Insurance Regulation (Office) has entered into consent agreements with American Fidelity Life Insurance Co. (American Fidelity) and Trans World Assurance Co. (Trans World) resolving allegations contained in Orders issued on Jan.7, 2009 by the Office. American Fidelity has agreed to pay $75,000 for penalties, costs, and fees. Trans World has agreed to pay $175,000 for penalties, costs and fees.
The agreements resolve issues related to American Fidelity’s and Trans World’s offer and sale of its Flexible Dollar Builder Life Insurance Policy (Policy) to active duty service members of the United States Armed Forces. The Policy included a side fund (Accumulation Fund) which violated Florida’s Military Sales Practices Rule, Rule 69O-142.200, Florida Administrative Code. The fund failed to credit interest properly, it contained an early withdrawal penalty, and it provided for automatic premium payments from deposits in the Accumulation Fund. During the Office’s investigation, the Office also found that American Fidelity and Trans World did not conduct meaningful needs assessments and failed to provide effective rates of return.
In addition to the penalties, costs and fees, American Fidelity and Trans World have issued refunds to its policyholders. American Fidelity and Trans World also re-filed its policies and are now in compliance with Florida law. American Fidelity and Trans World will also use an approved needs assessment form for future military sales.
“Our office has been and will continue to be vigilant in protecting military personnel and all Floridians from unfair and deceptive business practices,” said Commissioner Kevin McCarty.
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