NU Online News Service, Feb. 17, 2004, 6:10 p.m. EST – A Massachusetts state court in Boston has certified a suit filed against Savings Bank Life Insurance Company of Massachusetts as a class action.[@@]
The suit, Richard Goldstein vs. Savings Bank Life Insurance Company of Massachusetts, accuses the Woburn, Mass., insurer of underpaying dividends on SBLIC insurance policies.
The suit asserts breach of contract, breach of fiduciary duty and violations of law in relation to the allegation that there was an underpayment of dividends.
The class that was certified includes about 420,000 policyholders who bought contracts between 1992 and 2002 that were entitled to dividends from surplus or profits.
A trial date is set for Sept. 13. Arguments are set to be heard at a May 21 hearing, at which time a motion for summary judgment could be filed. The suit was filed in May 1998.
Among the claims, according to Jason Adkins, an attorney for plaintiffs, is that SBLIC targeted 7% for reserve funds, a lower amount than the 12% each domestic life insurance company is entitled to hold in its reserve funds.
“They were way over-reserved” and should be paying that money in dividends, says Adkins, with the firm of Adkins, Kelston & Zavez, P.C., Boston.
The suit also questions why whole life policies are receiving a larger share of the company’s dividend payments than term policies are receiving.
According to the certification order, of the annual dividends that were paid and payable in 2003, whole life policies were allocated 61% of dividends; yearly renewable term, 15%; other term policies, 6%; and paid-up insurance policies, 18%.
In Massachusetts, certification of a case is a procedural matter and not a reflection of the merits of the case, according to Tom Maffei of Griesinger, Tighe & Maffei L.L.P., Boston, the firm representing SBLIC.
The 7% estimate is a projection and not a requirement, Maffei says. Massachusetts law establishes a 12% requirement for insurers, he adds.
Maffei says the members of a class in a class action must have similar interests that are not adverse to the interests of other members. Term product policyholders and whole life policyholders have different interests, he says.