A company in the secondary life market is denying allegations by Sunshine State regulators that it worked to hold down prices paid to consumers who were selling their policies.
Regulators in the Florida Office of Insurance Regulation have issued a notice and order to show cause to Coventry First L.L.C., Fort Washington, Pa.
In the notice and order document, regulators have accused Coventry of rigging bids and making illegal payments to brokers.
Florida regulators began investigating Coventry’s transactions with Florida residents after Eliot Spitzer, who was New York state attorney general and now is governor, filed a lawsuit alleging that Coventry made secret payments in an effort to suppress competitive bids, officials say.
Coventry has denied the allegations made by the regulators both in New York and in Florida.
“Coventry believes the allegations in the complaint are unfounded and without merit,” a company spokesman says. “Beyond that, we have no further comment at this time.”
The Florida notice and order lists 11 counts against Coventry based on transactions with 8 Florida viators ranging in age from 73 to 84 years old.
One example involves an individual with 2 life insurance policies with a face value of $19.4 million.
The viator received only $968,832 in current value, while the brokers allegedly involved in the transaction collected more than $1 million for themselves, officials allege in the order.
Florida officials say Coventry collected a $247,707 bonus for keeping the total offer on the transaction, including the brokers’ compensation, under $2.5 million.
Coventry has not documented why it paid some of the brokers it compensated in connection with some of the transactions described in the order, officials say.
The notice and order document represents the first stage in the legal process, officials say.
Coventry has 21 days to challenge the notice and order, according to a notice accompanying the document.