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October 18, 2022 at 01:19 PM
What You Need to Know
- Genworth sought cost-of-insurance rate increases for the policies in 2019.
- Brighton Trustees sued Genworth, alleging its had explained its those rate increases in an unclear way and erred in other ways.
- The settlement could affect advisory clients in the wealth planning market as well as insurance agents' insurance customers.
A federal judge in Richmond, Virginia, approved a $25 million universal life insurance class action at a fairness hearing Monday.
Genworth Life and Annuity Company agreed to pay the settlement to about 13,400 policyholders affected by a Genworth move to increase the policyholders’ cost-of-insurance rate in 2019.
Genworth Life also agreed not to challenge claimants based on questions about whether a claimant has an insurable interest in the life of the insured, according to documents filed with the U.S. District Court for the Eastern District of Virginia.
In addition, Genworth said it would hold back on increasing class members’ COI rates for at least seven years.
What It Means
The settlement in the case, Brighton Trustees et al. v. Genworth Life & Annuity Insurance Company, could help clients who have universal life insurance policies and have faced cost-of-insurance rate increases.
Because some wealthy clients use products like universal life insurance in income planning arrangements and other long-term financial arrangements, not simply to provide death benefit protection, the settlement could affect advisory clients in the wealth planning market as well as insurance agents’ insurance customers.
The settlement could also affect clients who want to sell their insurance policies to life settlement companies, or who invest in life settlement funds themselves.
The Parties
Genworth Life is a subsidiary of Genworth Financial, a Richmond, Virginia-based insurer.
The lead plaintiff in the case is Brighton Trustees, which is acting as a trustee of Diamond LS Trust. Diamond LS Trust manages life settlement assets for funds affiliated with BroadRiver Asset Management, a money manager.
The list of defendants also includes Bank of Utah, which is Brighton Trustees’ securities intermediary, and Ronald Daubenmier, a policyholder affected by the cost-of-insurance increase.
The Parties’ Views
Genworth declined to comment on the settlement.
Steven Sklaver, an attorney on the Susman Godfrey team that represented Brighton Trustees, welcomed the judge’s approval of the settlement.
“It supports the policyholders and ensures they’re protected in the future from unlawful rate increases,” Sklaver said. “We remain committed to advocating for policy owners affected by similar COI increases.”
