The Florida Office of Insurance Regulation issued a Notice and Order to Show Cause to Coventry First LLC alleging violations of the Florida Insurance Code and for “engaging in fraudulent or dishonest practices.”
Coventry First LLC, founded in 1999, engages in the purchase of life insurance policies of elderly individuals in exchange for cash payments.
Coventry First LLC has already experienced legal problems regarding its practices. Former New York Attorney General Eliot Spitzer filed a lawsuit against the company in October, 2006, alleging “secret payments to suppress competitive bids” for practices in New York. The Office initiated its investigation to determine if Florida consumers were also affected.
The 11 count Order issued by the Florida OIR details Coventry’s transactions with eight Florida viators involving insured individuals ranging in age from 73 to 84 years old. In one example, a person had two life insurance policies with a face value $19.4 million.
The Coventry transaction paid the viator only $968,832 in current value while the brokers allegedly involved in the transaction were paid over $1 million. Amazingly, Coventry collected a $247,707 bonus for keeping the total offer on the transaction, including compensation, under $2.5 million. The OIR demands Coventry explain its actions and why it should be allowed to continue to operate in Florida.
Coventry’s alleged practices include payments to brokers to not seek other competitive bids, payments to brokers not involved with specific transaction, and even a payment to a broker to encourage another broker not to seek a competitive bid for sale.
The Notice and Order to Show Cause to Coventry is the first part of the legal process. If the company does not respond or answer satisfactorily, the OIR can issue a Final Order to suspend or revoke Coventry’s Viatical Settlement Provider License.
Source: Florida Office of Insurance Regulation
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