Dots - Unfair and Deceptive

One of the problems is that the notion of what is unfair and deceptive is not objective.

2010 0331 - FCIC - Interview of Alan Greenspan, Fed - 12p 

  • ul - semantics- soa
  • EF Hutton ad graph - Same Benefits

Mortgages vs Life Insurance

One of the problems is that the notion of what is unfair and deceptive is not objective.

  • There are certain practices so egregious that it’s black and white. For example, flipping refinancing in short order—getting people to turn over their mortgage in order to generate fees—that’s egregious.
  • In order for that to happen, the bank or the broker has to say that this is to your advantage, and that’s not the case. It’s a factually based question. Does that actually benefit the homeowner?
  • When you get away from that sort of issue, it gets very fuzzy.
    • These partially require jury trials to decide whether that’s unfair or deceptive. 
  • I didn’t study it, but that’s what the people who did study it told me.
    • If you’re dealing with language that’s not exact, my recollection is that I heard lots of complaints that you need better guidance from Congress about what is unfair.

2010 0331 - FCIC - Interview of Alan Greenspan, Fed - 12p 

Much of what he said in court has been revealed previously by regulatory investigations into the allegedly deceptive practices.

  • For example, he testified that top company executives knowingly allowed bad practices by sales agents -- such as duping customers into trading in old policies to pay for costlier new ones -- into the mid-1990s.

2001 1214 - WSJ - Ex-Marketing Executive Says Prudential Knew Misleading Materials Were in Use - [link]

  • Policyholder 1;  I'm dropping my whole life policy with your company and replacing it with company x's universal life policy.
  • Agent 1:  Universal life is not right for you, and I recommend retaining your present policy.

  • Policyholder 2:  I'm dropping my whole life policy with your company and replacing it with company x's universal life policy.
  • Agent 2:  Universal life is not right for you, and I recommend retaining your present policy. -- (Sounds familiar, so far!)
    • But if universal life is what you really want, I will sell you our company's product.

--  Harold Leff, Actuary with the Metropolitan

1983 - SOA - Universal Life, Society of Actuaries - 24p

Historically, companies were reluctant to replace life insurance because they might be in violation of the "twisting" laws.

  • Times have changed.

In 1969, the National Association of Insurance commissioners developed the 1970 Model Life Insurance Replacement Regulation.

  • This removed most of the "twisting" fears. 

--  William T. Tozer <ACLI>

1981 - SOA - Individual Life Insurance Cost Disclosure Issues, Society of Actuaries - 22p

ROWS ABOUT TWISTING

In the seventies, when life insurance companies in the  United States were passing through the crucible, all sorts of things were done which nowadays are denounced, at least, if not avoided entirely.

  • The trouble was that more than half the life insurance companies of the country were in a failing condition, and their only hope often was to diminish their liabilities by twisting policies from one form to another or to escape the liabilities in whole, or in part, by making an arrangement with another company to furnish it a list of the policyholders, so that it could do the twisting.
  • The four or five companies that were swallowed up in the Universal reached an apparent state of solvency in that manner.
  • They had some kind of an understanding.

1898 - Book - Things Agents Should Know: An Intensely Practical Book for Life Insurance Agents - Miles Menander Dawson