American Fidelity, Trans World to pay $250,000 and give refunds to policyholders
Florida Office of Insurance Regulation (Office) has entered into consent agreements with American Fidelity Life Insurance and Trans World Assurance resolving allegations contained in orders issued on January 7, 2009 by the Office.
Under the agreement, American Fidelity has agreed to pay $75,000 for penalties, costs, and fees, while Trans World has agreed to pay $175,000.
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 US 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, the office said.
During the Office’s investigation, it 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, and re-filed its policies and are now in compliance with Florida law. They will also use an approved needs assessment form for future military sales.
Kevin McCarty, commissioner of Florida Insurance, said: “Our office has been and will continue to be vigilant in protecting military personnel and all Floridians from unfair and deceptive business practices.”