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Press Release

Florida Office of Insurance Regulation Resolves Military Sales Litigation - Insurers to Pay $250,000 and Give Refunds to Policyholders
Tuesday, December 29, 2009
Contact Info:

Jack McDermott                             Tom Zutell
850-413-2515                                850-413-2515
Jack.McDermott@floir.com              Tom.Zutell@floir.com

TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced the Florida Office of Insurance Regulation (Office) has entered into consent agreements with American Fidelity Life Insurance Co. (American Fidelity) and Trans World Assurance Co. (Trans World) resolving allegations contained in Orders issued on Jan.7, 2009 by the Office.  American Fidelity has agreed to pay $75,000 for penalties, costs, and fees. Trans World has agreed to pay $175,000 for penalties, costs and fees.
 
The agreements resolve issues related to American Fidelity’s and Trans World’s offer and sale of its Flexible Dollar Builder Life Insurance Policy (Policy) to active duty service members of the United States Armed Forces. The Policy included a side fund (Accumulation Fund) which violated Florida’s Military Sales Practices Rule, Rule 69O-142.200, Florida Administrative Code. The fund failed to credit interest properly, it contained an early withdrawal penalty, and it provided for automatic premium payments from deposits in the Accumulation Fund. During the Office’s investigation, the Office also found that American Fidelity and Trans World did not conduct meaningful needs assessments and failed to provide effective rates of return.
 
In addition to the penalties, costs and fees, American Fidelity and Trans World have issued refunds to its policyholders. American Fidelity and Trans World also re-filed its policies and are now in compliance with Florida law. American Fidelity and Trans World will also use an approved needs assessment form for future military sales.
 
“Our office has been and will continue to be vigilant in protecting military personnel and all Floridians from unfair and deceptive business practices,” said Commissioner Kevin McCarty.
 
For more information, see the American Fidelity Consent Order and the Trans World Consent Order.
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Contact Info:

Jack McDermott                             Tom Zutell
850-413-2515                                850-413-2515
Jack.McDermott@floir.com              Tom.Zutell@floir.com

About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about the Office, please visit www.floir.com or follow us on Twitter @FLOIR_comm.

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