A California life insurer says it plans to fight an order revoking its right to sell life insurance in Georgia.
Georgia Insurance Commissioner John Oxendine says he has revoked the certificate that gives Trans World Assurance Company, San Mateo, Calif., the authority to sell life insurance in Georgia because of concerns about Trans World’s sales of life insurance products to active-duty U.S. military personnel in Georgia.
Oxendine also has imposed a $214,000 fine on the company and ordered Trans World to refund monies collected from active-duty members of the U.S. Armed Forces for products sold in Georgia since September 2007.
The order requires Trans World to continue to service existing contracts sold before September 2007 and to honor contracts made after Sept. 1, 2007, until refunds are made.
Trans World “was aware of the law in Georgia, and they violated the law by selling products that were prohibited by Georgia,” Oxendine says.
Trans World President Charles Royals is objecting to the disciplinary actions.
“We completely disagree with the ruling,” Royals says. “We are filing an appeal in Georgia Superior Court.”
The Oxendine decision contradicts findings by the Internal Revenue Service, the Securities and Exchange Commission, and federal and state courts, Royals says.
The decision “is legally and factually wrong,” and it is based on technicalities, Royals says.
Oxendine concludes in his order that Trans World violated Georgia military sales practices regulations by failing to determine whether service members were on active duty or had Service Members Group Life Insurance coverage before assessing the service members’ need for additional coverage.
Oxendine also finds fault with the accumulation fund component of Trans World’s Flexible Dollar Builder life insurance policy.
The accumulation fund, included with policies sold in Georgia from September 2007 to March 2008 does not credit interest from the date of deposit until the date of withdrawal, officials say.
Instead, the accumulation fund credits the lesser of the average or daily monthly balance, or the ending balance, whichever is lesser, officials say.
Trans World also imposes a 5% withdrawal charge on any withdrawal from the fund during the first 10 policy years, officials report.
The accumulation fund provisions violate the Unfair Trade Practices Act as well as the military sales practices regulations, Oxendine says.
In addition, Trans World has failed to provide a schedule of effective rates, officials say.