As mentioned in our prior post, New York Attorney General Andrew Cuomo has begun an investigation into the alleged misuse of retained asset accounts by life insurance companies.  This probe started with two of the largest life insurers and has now been widened to include six more.  The latest subpoenas were sent on Friday, July 30th.

According to the Attorney General’s website, his office has “begun a comprehensive review of the life insurance industry and its practices to determine the extent to which other companies are engaged in these or any other similar fraudulent practices.”

In other news, a class action law suit was filed in the U.S. District Court for the District of Massachusetts, Western Division, on behalf of the beneficiaries of the Servicemembers Group Life Insurance program, the Veterans’ Group Life Insurance program, and the Traumatic Injury Protection program against the life insurer that administers those three programs.  Similar to Attorney General Cuomo’s allegations, the class action filing alleges that the program administrator held onto the death benefit funds after they were due to the beneficiaries in order to earn a return on those funds that was substantially larger than that paid to the beneficiaries over the same time period.  The complaint alleges that beneficiaries of these programs have a right of action against the program administrator “to collect on profits generated by the [benefit funds] between the time of the . . . death or traumatic injury of the [insured] and the time at which the full benefits are finally delivered to the beneficiaries.”

We will continue to monitor developments relating to the use of retained asset accounts here at InsureReinsure.