Subpoena Issued to Insurer Over Sales to G.I.'s

The New York Times
October 19, 2004

The American Amicable Life Insurance Company of Waco, Tex., confirmed yesterday that the Justice Department had subpoenaed documents relating to the company's sale of insurance products to military personnel and other federal employees.

The civil subpoena -- which people who participated in discussions about it said was issued by the United States attorney's office in Philadelphia -- was served in late July, after a series in The New York Times disclosed that the company's agents had used misleading sales practices to sell expensive life insurance policies to Iraq-bound recruits at Fort Benning, Ga.

"The company is working with the Department of Justice regarding a civil inquiry," said Mark Palmer, a company spokesman. "Our desire is to responsibly respond to the U.S. attorney's questions while continuing to provide solid, stable life insurance to our customers."

A company memorandum obtained by The New York Times showed that the subpoena specifically asked for information about the decision to begin selling "any company product as a savings plan rather than as an insurance plan or policy."

Last month, American Amicable of Texas dismissed three agents involved in the abusive sales at Fort Benning, disciplined a fourth agent and offered to return premiums that soldiers there paid for their policies -- $1,200 a year for death benefits of less than $30,000. Several young soldiers who bought the policies said they thought they had enrolled in a savings or investment plan.

Michael S. Blume, an assistant United States attorney in Philadelphia, said yesterday that his office "can't confirm or deny the existence of any investigation, as a matter of policy."

American Amicable Life Insurance is one of four companies owned by American Amicable Holding, also based in Waco. Last year, its sister company, Pioneer American Insurance Company quietly offered refunds to more than 340 marines at Camp Pendleton, Calif., after base legal officers complained about misleading sales tactics.

Additional refunds may be owed to soldiers at other bases where the agents at Fort Benning also worked, according to insurance regulators in Georgia, who are conducting a broad investigation of insurance sales on military bases in that state.

This month, the nation's leading insurance ratings agency, A.M. Best Company, announced that it was reviewing, with negative implications, the financial strength ratings of the American Amicable Holding affiliates based on "the adverse publicity within the military base life insurance market surrounding improper sales practices by some agents with enlisted military personnel."

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