Amicable Life Insurance Companies Settlement - WTOC-TV: Savannah, Beaufort, SC, News, Weather & Sports

Amicable Life Insurance Companies Settlement

The Fort Stewart/Hunter Army Airfield Public Affairs Office has released the following: 

    Hunter Army Airfield, Ga. -   On August 3, 2006, John Oxendine, the Georgia Insurance Commissioner, announced his office together with approximately 42 other states, the District of Columbia and Guan, and in conjunction with the United States Department of Justice and the United States Securities and Exchange Commission, had entered into a Multi-state Regulatory Settlement Agreement with American Amicable Insurance Company of Texas, Pioneer American Insurance Company and Pioneer Security Life Insurance Company. The total settlement is valued at approximately $70 million dollars and affects over 55,000 current and former service members throughout the United States.  If they still hold active insurance policies, they will receive cash refunds and modifications to those policies.  An additional 35,000 service members policy-holders will receive increased cash surrender benefits. Furthermore, the American Amicable companies agreed to immediately cash refunds of $10 million dollars.  These companies have also agreed not to sell any products on military installations for a period of five years and not to use any military personnel membership listings for sales or solicitation purposes. 

            The settlement alleges the American-Amicable companies violated insurance and consumer protection statutes in their sales and marketing of certain life insurance products to service members.  The companies and their representatives sold term life insurance policies primarily to military personnel and often represented theses policies as investment products.

            According to Lieutenant-Colonel Norman Allen, the Staff Judge Advocate of the Third Infantry Division and Fort Stewart, the settlement will affect several hundred Soldiers at Fort Stewart and Hunter Army Airfield.  "We are trying to determine the exact number and identity of the Soldiers who may be eligible to participate in the settlement" said Lieutenant-Colonel Allen. He also pointed out that the identification of the Soldiers entitled to participate in the settlement is complicated by the transfer or discharge of Soldiers who were assigned to the Division or Installation as well as the assignment of Soldiers who may have purchased policies at other installations and are now assigned to the Division or Installation. 

            During the Division's recent deployment, the attorneys and paralegals of the Fort Stewart Legal Assistance Office mailed surveys to Division Soldiers identified by Commissioner Oxendine's Office as having purchased policies from the American Amicable Companies.  The purposes of these surveys was to confirm the Soldiers indeed purchased a policy from one or more of the American Amicable Companies and to determine whether the Soldiers were dissatisfied with the policy.  Lieutenant Colonel Allen encourages any Soldier who received a survey and has not returned it to the Fort Stewart Legal Assistance Office to do so immediately. 

            The practices of the American Amicable Companies at Fort Stewart came to light as the result of investigations by Fort Benning's Office of the Staff Judge Advocate and Commissioner Oxidine's Office. These investigations focused on allegations that American Amicable Companies' representatives engaged in unauthorized solicitation of Basic and Advanced Individual Training classes at Fort Benning.  Many of the Soldiers in those classes purchased insurance products apparently believing the policies were a retirement investment or annuity.   These sales were uncovered by Colonel Lyle Cayce and his attorneys who brought them to the attention of the Georgia authorities.  Several Noncommissioned Officers who allowed access to the classes received Non-judicial punishment under the Uniform Code of Military Justice while others received General Officer Letter of Reprimand, according to Lieutenant-Colonel Allen. 

            During 2004, Legal Assistance Attorneys at Fort Stewart received complaints from Soldiers who stated they had purchased policies from American Amicable representatives.  "We were concerned about the tactics used by American Amicable representatives and the Soldiers belief they had purchased annuities or other investment products," said Russell Putnam, Chief of Client Services.  The tactics used included soliciting Soldiers at the Installation Reception Station who were then taken to the local offices of the company.  Once there, the Soldiers were served a meal during which the representatives would attempt to sell policies.  In other cases, Senior Noncommissioned Officers appeared to have left Soldiers with the impression that the Soldiers were required to attend "class' or presentations about managing their financial affairs or saving for retirement.  According to Mr. Putnam, it was difficult to determine exactly what the Soldiers thought the purpose of the "classes" were or whether they had the option of not attending. 

            The Fort Stewart Legal Assistance Office worked with Commissioner Oxendine's Office in the Fort Stewart phase of the investigation.  A day long hearing, presided over by Commissioner Oxendine, was held in Hinesville, Georgia during December, 2004.     During the hearing, Soldiers who had purchased products from American Amicable, representatives of American Amicable and retired Senior Non-Commissioned Officers testified.  The Soldiers' testimony outlined the methods used by American Amicable to sell its policies. 

Mr. Putnam pointed out that the actions described during the testimony violated existing Department of Defense, Department of Army, and Fort Stewart Regulations governing solicitation on the Installation. These regulations limit where and when solicitation may occur.  In addition, Fort Stewart's Solicitation Regulation requires any one who wishes to solicit on the installation to apply for and obtain a solicitation permit.

`According to Commissioner Oxendine the American Amicable Companies have agreed to: To make cash payments totaling $10 million to former and current service members who were issued either a "Wealth Builder" or "Horizon Life" policy from January 1, 2000 through July 28, 2006.  Approximately 57,000 service members who purchased in Georgia, are eligible to receive this relief.

  • To increase the cash surrender value for all in-force "Horizon Life" and "Wealth Builder" policies regardless of when the policy was issued or military status. Approximately 53,314 current policyholders will receive this benefit, including 32,155 military policyholders and 21,159 non-military policyholders. 18,739 service members who were not eligible for the cash payment will receive this relief, bringing the total number of service members covered by the agreement to 73,739.

More than 6,000 consumers who purchased their policies in Georgia will be covered under the agreement.  The total settlement, including the increased policy benefits, is valued at approximately $70 million.

In addition to economic relief, the companies have will be required, among other things, to:

  • Stop soliciting or selling any insurance product on a military installation for five years.
  • Stop selling the Horizon Life product after December 1, 2006.
  • Immediately terminate any agent discovered selling company products on a military installation.
  • Not accept any insurance application for Army enlisted personnel with the rank of E-1 through E-3 without proof the applicant has been counseled by a superior officer as required by Army Regulations.
  • Not possess, complete, submit, or process or assist in the submission or processing of any DD Form 2558 (Authorization to Start, Stop of Change Allotment).
  • Not establish any account or fictitious account in the name of its applicant/insured service member at a depository institution for the purpose of receiving funds for the payment of premium or use Treasury Form 1199A (Direct Deposit Sign Up).
  • Not offer any gift with a value greater than $5.00 to any individual who has direct command authority over service members who rank between E-1 and E-4.
  • Not participate in or assist with any class, seminar, or other training for service members regarding personal finance when such class, seminar, or other training occurs on a military base, installation, or reservation.

The settlement agreement can be found at www.gainsurance.org.  Consumers who have questions regarding the settlement can call the companies' consumer service center at 1-800-736-7311.

Lieutenant Colonel Allen also asks any Service Member assigned to the Division, Fort Stewart or Hunter Army Airfield who purchased a policy from one of the companies participating in the settlement to contact the Installation Legal Assistance Office for further information.  The telephone numbers for the office are:  (912) 767-8809 or (912) 767-8819.

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