The Florida Office of Insurance Regulation (OIR) announced today that Allianz Life Insurance Company has agreed to a multi-state settlement with 44 state insurance regulators regarding suitability issues involving the sale of so-called “two-tier” fixed annuities, some of them equity indexed annuities.
The settlement agreement requires corrective action to be taken by the company, a remediation plan and a $10 million penalty to be paid to the participating states.
Lead states involved include Florida, Iowa, Minnesota and Missouri.
According to a statement from the Florida OIR, the states launched a probe after some consumers who purchased fixed annuities from 2001 to 2008 complained to Allianz regarding the annuities’ suitability for their circumstances or representations made by Allianz or its agents during the sale of an annuity.
Under the remediation plan, Allianz will implement a review process addressing new and previously filed complaints by customers who purchased an eligible fixed annuity product between 2001 and 2008.
The agreement allows consumers to have a re-review of their complaints based on criteria in the agreed order.
A new complaint can be filed by affected consumers until March 31, 2013, either through the “Contact Us” feature on Allianz’s website, or by telephone at 866-604-7488, according to the settlement document.
If a complaint is found to be justified, the consumer will be offered a retroactive cancellation of their policy and a full refund.
In the settlement document, Allianz said that, it “wishes to resolve the review in the interest of compromise, to avoid the disruption of its business, and for other reasons, but does not admit or concede any actual or potential violation, fault, wrongdoing, or liability in connection with the review.”
Sara Thurin Rollin, Allianz Life Insurance director of external communications, said that from Allianz Life’s perspective, after a “thorough” regulatory review of Allianz Life’s annuity records from 2001 to 2008, “there was not a particular theme to the market conduct exam,” and “all aspects of our fixed annuity business practices were evaluated.”
She said each state will get an average of $230,000 from the settlement.
She added that Allianz “is pleased” that the final agreement “contains no allegations of wrongdoing, and requires only minor modifications to our business practices many of which already go beyond what is required by state law.”
She added that, “Although we could have continued to dispute the penalty, we would have lost the opportunity to resolve the matter on a large-scale basis.”