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Regulators, Equitable Life Reach Settlement regarding Complaints of Misleading Sales


CONTACT: Tami Torres (DFS)
(850) 413-2842
JoAnn Carrin (OAG)
(850) 245-0150

TALLAHASSEE – Nearly 13,000 Floridians who purchased life insurance policies from The Equitable Life Assurance Society will soon receive notices regarding their rights under a settlement and outreach plan negotiated by state regulators.

The settlement was reached between Equitable Life and the Florida Department of Financial Services, the Office of Insurance Regulation and the Attorney General's Office, and follows a joint investigation by various regulators into the life insurance sales practices within the industry. The particular sales practices under review with Equitable Life involved how long policyholders would have to pay premiums, the effect of replacing life insurance policies, and life insurance policies presented as an investment.

"Consumers trust their agents to provide reliable advice and information," said Florida's Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services. "If that trust is ever broken, consumers can be affected both financially and emotionally. The integrity of the industry depends on that trust."

"This case represents a perfect example of government agencies working together on behalf of the people we serve," said Florida's Attorney General Charlie Crist. "Florida is sending a message that whether serving as agents for the government, or business, the public must be viewed as partners or clients and not someone to be exploited."

Kevin McCarty, director of the Office of Insurance Regulation, said he was pleased that Equitable Lifenegotiated a settlement. "The company is taking appropriate steps to respond to any consumers' complaints," he said.

The agreement concludes a joint investigation into life insurance sales practices between January 1, 1982, and May 31, 2003. Under the terms of the settlement and outreach plan, Equitable Life will mail notices to about 13,000 Floridians who may have questions or concerns about their life insurance policies in one of three areas:

· Vanishing premium – sale of a life insurance policy in which the policyholder may have received an illustration depicting that out-of-pocket premiums were payable for a shorter period than the life of the policy.

· Replacement of life insurance – sale of a life insurance policy using the values from a pre-existing life insurance policy to purchase, in whole or in part, the new policy.

· Life insurance presented as an investment – sale of a life insurance policy where the policyholder may not have understood that the sole or primary nature of the product was life insurance. For example, there may have been confusion regarding products referred to as a "Private Pension Plan" or a "College Funding Plan."

Consumers should be receiving their notices within 120 days.

Floridians receiving Equitable Life's outreach plan notices must respond in writing within 45 days of the receipt of the notice, at the address stated in the notice, if they wish to file a complaint and have it reviewed under the terms of the settlement. Equitable Life will then determine whether it will make a settlement offer. Offers may include refunds of amounts paid, reversal of transactions or restoring policy values.

If Equitable Life determines not to make a settlement offer, or if the policyholder rejects any offer made by the Company, binding arbitration will be available at Equitable Life's expense. Binding arbitration can be in writing, in person, or by telephone, with in-person arbitrations to be offered in nine metro areas around Florida.

Equitable Life customers in Florida who do not receive an outreach plan notice, but who believe their life insurance policies were affected by one of the sales practices mentioned, have nine months from the date of the agreement to file a written complaint seeking to have their case reviewed to determine whether it falls within the terms of the settlement and outreach plan.

Consumers who have questions about the settlement can contact the Department of Financial Services' toll-free helpline at 1-800-342-2762. Equitable will also provide a special toll-free telephone number, 1-866-763-2542, for consumers who have questions about the settlement process.