Allianz settles annuities cases

State Insurance Commissioner Steve Poizner will announce details
today in Oakland of a $10 million settlement involving the sale of
improper annuities to California seniors. by Minnesota-based Allianz
Life Insurance Company of North America.
Under the terms of the settlement, Allianz will enact more
consumer protections to ensure that seniors who buy annuities from them
starting in March are buying products that best suit their financial
circumstances.
In addition, some 288 seniors who purchased the deferred fixed
annuity products that were improperly marketed to them from Jan. 1,
2004, through July 31, 2005, will be able to cancel their policies. The
company will contact those eligible seniors.
However, an estimated 10,000 seniors who have purchased Allianz
annuities during the above time period may also be eligible to cancel
the policies if it is determined they were improperly marketed,
according to the department.
Consumers often turn to annuities, which are sold by insurance
companies, to help fund their retirement years. Typically, the insurance
company that sells the annuity product agrees to make periodic payments
to the consumer at a future date.
Among other things, the California investigation revealed that
Allianz sold 126 policies to 84-year-old and 85-year-old seniors
bymarketing the annuities as products that would provide an immediate
bonus payment. The policies were sold to replace existing policies held
by the seniors with other insurers.
In actuality, the Allianz bonus payments would not go into
effect for at least five years after the annuity was purchased,
according to the department. Some 97 percent of the 126 policies that
were sold as replacement policies to the elderly seniors were determined
to be financially unsuitable given their advanced years.
Seniors are encouraged to call the state Department of Insurance
hotline at 1-800-927-4357 for more information and assistance.
“This landmark settlement ends years of aggressive and
misleading marketing schemes targeted to our most elderly and
vulnerable,” Poizner said in a statement.
The settlement stems from a department investigation into the
sale of Allianz annuities and complaints made by consumers.
Allianz is the largest seller of annuities in California,
according to the department.
Last October, the company settled a similar lawsuit with the
Minnesota Attorney General’s Office regarding annuities where were sold
to more than 7,000 seniors between 2001 and 2007.
The settlement calls for Allianz to implement a program starting
in March that will provide seniors with more consumer protection when
it comes to purchasing new annuities. Among other things, the program
calls for Allianz to place a greater amount of review and analysis when
reviewing applications for annuity products sought by people who are 65
years or older.
“Allianz Life and the California Department of Insurance share a
common goal — we want to ensure that consumers purchase only products
that meet their financial needs and objectives,” said Gary Bhojwani,
president and chief executive of Allianz Life, said in a statement.
In addition to the settlement, Poizner plans to issue proposed
regulations that will require all insurers to evaluate whether an
annuity is a reasonable and prudent investment given the life
circumstances of the senior who is buying it. The regulations would also
be used to develope standards for selling annuities that would apply to
insurance agents.
Amy Bach, executive director of San Francisco-based United
Policyholders, praised the settlement.
“We are pleased the Department did a thorough investigation and
took action based on what they found. There are seniors who being
hustled and confused into buying expensive annuity products and
inappropriate products that simply don’t work for them,” Bach said.
“It’s not that all annuities are bad,” she said. “It’s just a
complicated product and needs to be properly selected for the
individual.”
Eve Mitchell covers personal finance. She can be reached at
925) 952-2690 or emitchell@bayareanewsgroup.com.


The information presented in this publication is for general informational purposes and is not a substitute for legal advice. If you have a specific legal issue or problem, United Policyholders recommends that you consult with an attorney. Guidance on hiring professional help can be found in the “Find Help” section of www.uphelp.org. United Policyholders does not sell insurance or certify, endorse or warrant any of the insurance products, vendors, or professionals identified on our website.

Source: https://uphelp.org/allianz-settles-annuities-cases/
Date: March 28, 2024