Minnesota Attorney General Lori Swanson filed suit on Jan. 9 against Allianz Life Insurance Company of North America, Minneapolis. The suit alleges Allianz violated Minnesota laws that prohibit sale of deferred annuities which are unsuitable for the buyer. The insurer is also accused of false advertising, consumer fraud and deceptive sales practices.
Swanson singled out sales to seniors.
“Allianz and its agents aggressively marketed deferred annuities to seniors without regard to the suitability of the sale and without disclosing that seniors’ limited savings could be tied up for years,” she said. She also alleged failure to disclose to seniors that they could not cash in their annuities early without paying hefty surrender penalties, and that “immediate” bonuses offered with the annuities weren’t payable for up to 15 years.
Allianz agents often lured seniors to attend estate planning or wealth management seminars, but the real purpose was to sell annuities to the seniors, she said.
The AG’s office is reviewing other companies’ annuity sales practices for evidence of unsuitable sales and/or deceptive marketing, too, she said.
The suit seeks to stop the insurer from making inappropriate sales. It also seeks civil penalties and restitution to Minnesota seniors who have been harmed.
Allianz Life “strongly disagrees” with the allegations and is confident it has complied with Minnesota law, says Jody Hilgers, vice president, corporate communications and brand management. “We will vigorously defend our products, practices and legal position.”
Over 99% of Allianz annuity policyowners have never filed a complaint with Allianz Life, Hilgers says.
Allianz sells fixed annuities (traditional and indexed) and variable annuities. In the first 9 months of 2006, it held a 28.6% market share on fixed index annuity sales of over $5.5 billion, according to Advantage Compendium Ltd., St. Louis, Mo.