View this article online: https://www.claimsjournal.com/news/midwest/2007/10/10/84157.htm
Some seniors who might have died before they could get their annuity money back from Allianz Life Insurance Co. now can apply for refunds and interest under a lawsuit settlement announced this week.
Minnesota Attorney General Lori Swanson had accused Allianz of selling annuities that weren’t appropriate for older retirees. Many of them claimed they had been told they could get their money out, only to be forced to choose between onerous penalties or leaving their money in the annuity for years.
Allianz had denied any wrongdoing, and Swanson said the settlement did not force them to admit any. Allianz also agreed to pay $500,000 in fines and expenses.
Swanson said Allianz was the nation’s largest seller of these types of annuities.
The settlement, approved on Monday by a Hennepin County judge, has some fine print of its own.
People who are over 65 and who bought Allianz deferred annuities after Jan. 1, 2001, can apply for a full refund without penalties. Swanson said more than 7,000 annuity holders with $325 million worth of annuities are expected to get letters outlining the refund process. Annuity holders will have four months to apply for refunds.
Allianz and the attorney general’s office will decide jointly whether to grant the refund, but the settlement calls for them to “liberally construe” the facts in favor of the consumer. They will look for evidence that the annuity “was unsuitable on the date of application or that Allianz or its agent misrepresented the terms or conditions” of the annuity.
A third party will settle disputes over who should get refunds.
Swanson said her office is also investigating other companies over similar practices.
Golden Valley-based Allianz Life is a subsidiary of German insurer Allianz SE.
“The settlement process with Attorney General Swanson was a difficult one, but it soon became clear that the common ground we share is a sincere desire to protect the needs of consumers in the State of Minnesota,” said Allianz Life CEO Gary Bhojwani in a prepared statement.
The company said it did not expect the financial impact of the settlement to be major.
Allianz agreed to give closer scrutiny to annuities being sold to people over age 65. Annuity applicants who will be left with less than $75,000 in liquid assets after they buy the annuity, or those with annual incomes of less than $20,000, will get extra scrutiny before they are allowed to buy the annuity.
Swanson said she expects the new procedures will lead to Allianz rejecting “substantially more policies” than it does now.
“These financial instruments are incredibly complicated. We have lawyers in the office who struggled to understand them.” she said. “They’re written in small print. They’re extraordinarily complex. I believe they’re intentionally designed to be complex. And that can lead to abuse, as well.”