A recent federal district court decision dismissing a putative class action complaint against AXA Equitable Life Insurance Company may portend trouble for plaintiffs pursuing a number of similar so-called “shadow insurance” cases against New York insurers based on allegedly sham reinsurance transactions with affiliated (or “captive”) reinsurers. Continue reading »
In a highly-anticipated opinion, a federal district court found for the insurer in a California class action involving alleged improprieties in the sale of indexed universal life insurance policies. Plaintiffs alleged that the insurer failed to disclose to the class in Walker v. Life Ins. Co. of the Southwest (1) the “volatility defect” of the IUL policies, that the interaction between the policy design and market volatility created a significant risk that the policy would lapse or suffer reduced value, and (2) the “tax defect,” that policyholders would be required to pay substantial taxes if they had outstanding loans at the time of surrender. Plaintiffs claimed they were damaged because they would not have purchased the policies or would have paid less for them had they known the allegedly omitted facts. Continue reading »
Auto insurers control the cost of collision repairs through the use of direct repair programs. The programs feature networks of auto body repair shops that enter into contracts agreeing to discount labor rates and other charges in exchange for a steady stream of customer referrals and streamlined adjustment procedures. As insurer referrals constitute the vast majority of business for most auto body repair shops, direct repair programs effectively set the market for labor rates at a level much lower than the “posted” rates auto body repair shops would otherwise charge. In an effort to realize higher rates, auto body repair shops throughout the country continue to mount legal challenges to the labor rates associated with such direct repair programs. Continue reading »
View the entire Summer 2015 issue of Expect Focus on carltonfields.com. Expect Focus is a quarterly review of developments in the insurance and financial services industry, provided on a complimentary basis to clients and friends of Carlton Fields.