Class Action Sales Practices Litigation Surrounding Vanishing Premium Sales
Analysis Group provided analytical support for litigation and settlement negotiations in several class action litigation matters concerning allegations about sales and marketing practices by insurance agents selling "vanishing premium" life insurance policies. These policies were sold to policyholders who wanted to offset future premiums using policy dividends and earnings. Several of the litigation matters also involved allegations of "churning," where agents would replace existing policies with new policies. Similarly, there were allegations of selling insurance policies where the owners had an incomplete understanding of the purchase, including allegations that they did not realize they were purchasing life insurance products.
Managing Principal Bruce Deal and other Analysis Group consultants, including Principal Mark Gustafson, provided analytical support for this litigation. Our work involved analyzing data from multiple systems, including paper files, electronic transaction (loan and premium payment) records, and annual policy records for millions of potential class members. Examples of these assignments include estimating incidence of various types of sales, modeling financial outcomes under alternative scenarios, recreating and modeling alternative dividend structures, and estimating exposure costs under alternative compensation scenarios. We worked closely with outside counsel, in-house personnel, and outside actuarial consultants throughout the projects.
Analysis Group has been retained by several large insurance companies involved in similar litigations, including John Hancock, Ohio National, The New England Life Insurance Company, National Life of Vermont, Allmerica Financial, and the Knights of Columbus.