State Goes After Another Insurer

May 22, 2013, Blog post by Moyer & Osibodu

It appears that the dust was beginning to settle for the insurance industry and then, here comes another lawsuit. The California Controller, John Chiang, recently filed a lawsuit against American National Insurance Company (ANICO), a Texas insurance company, alleging that the company’s dilatory and obstructive actions have significantly impeded the Controller’s audit to determine whether the company is complying with the state’s unclaimed property laws.  In a subsequent statement, Chiang mentioned that “he’s challenging the pervasive industry practice in which many insurers are fleecing policyholders by welcoming premiums while turning a cold shoulder when the time comes to pay.”

ANICO, in its defense, is arguing that “currently in-force policies are not subject to the Controller’s audit and that such data would not be produced because it has made its own determination that such data will not lead to reportable unclaimed property.”

As we mentioned in a prior blog from May 2012, Lessons learned from the MetLife $700 million unclaimed property settlement, insurers have fulfilled their commitment by promptly paying benefit claims 99% of the time. However, it is the 1% of delayed payments that is receiving the attention and tarnishing the reputation of these insurance companies.  The big question is whether ANICO has a “1%” and how much is due, especially to California.

One may think that ANICO is just like a “salmon swimming upstream….” in light of the various settlement agreements concluded between the States and the likes of John Hancock, MetLife, Prudential, AIG and Nationwide.  Only time will tell whether the salmon is successful or whether it ends up eaten by the “bear”!