Jury Awards $113.85M in United of Omaha Rescission Case

[Lifeinsuranceman715]

From my reading of the facts, this sounds like the insured lied about several material facts... that would have affected insurability. This could be considered fraud. She "tricked" the insurance company into issuing the policy. Fraud CAN survive beyond the two years. As to when the two years ends, and whether the date of death is a date that should essentially be a point in time that is used to determine whether the policy is contestible under ordinary circumstances seems to be the issue here. If I were the judge/jury, I would certainly not be rewarding a fraudulent plaintiff with a ludacris monster award here. WORST case, IF it is determined that the law required the defendant to challenge the policy within 2 years, regardless of when the death occured, then perhaps they should have to pay the claim, but not any more than that other than reasonable attorney's fees to prevent bad faith. There was no bad faith here. The insurance company (UO) has a legitimate "colorable" argument that they were fleeced, and should not pay the claim. This is a HORRIBLY misguided verdict and helps no one other than the crooked plaintiff's family and their attorney. It is bad law, and a bad decision, and will likely either be reversed on appeal, or the amount radically reduced.

 

[scagnt83]

For instance. If they qualify for Standard but lied about health and got issued preferred and then they have a death during the 1st two years, they should only get return of premium. That's it. They should not get the standard benefit. Otherwise why wouldn't everyone lie and take their chances? Why would smokers EVER disclose that they smoked if the worst that would happen is that they would get the same benefit that the honest smokers got?

Because most people dont lie and its not a systemic issue at most carriers.... not just because of peoples morality, but because statistically only a tiny fraction will die in the first 2 years.

Its making an issue out of a non-issue.

And because it makes for extremely bad press and costly court cases, just to fight issues that are already accounted for actuarially. Most consider that to be bad business.

Then there is the whole host of other issues that go into fighting a case based on if the person "intentionally" answered that question wrong. So many things go into that issue... including the agent, which can often be a wild card issue... how many shady agents have glossed over medical questions before? Think carriers dont know the stats behind that? They are rolling the dice on if the agent didnt have a hand in the omission as well by bringing it to court.

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And despite if you or I think its right or wrong. The main point of my post was the fact that its established precedent in court cases already.

So to go against this in the way UoO did, makes little sense to me. They probably paid $250k in attorney fees just to fight a $500k claim that ended up being a $113,000,000 claim.... along with a lot of negative press.

 

[Newby]

That is the way companies used to handle smokers. It was the same as mistatement of age. At death, the face would be adjusted to the proper face amount for the status.. Companies were taking a bath on it and insurance commissions allowed to be changed to a material misstatement.

There shouldn’t even be different rates for smokers and non smokers if that’s the case. Why would they only penalize the honest people with higher rates?

 

[rousemark]

There shouldn’t even be different rates for smokers and non smokers if that’s the case. Why would they only penalize the honest people with higher rates?

it is always the honest people that are penalized. In the past, people could get away with lying about all sorts of ratable conditions. Not so much now with MIB and Script check.

When Independent life came out with a GI plan for their debit folks back in the day, a manager stood before the agents and told them, "Now, we can legally do what we have been doing all along, except now they will get interest on their money." They were answering the health questions no and telling the folks if they died during the first two years all it would pay would be a return of premiums..

 

[rousemark]

Because most people dont lie and its not a systemic issue at most carriers.... not just because of peoples morality, but because statistically only a tiny fraction will die in the first 2 years.

Its making an issue out of a non-issue.

And because it makes for extremely bad press and costly court cases, just to fight issues that are already accounted for actuarially. Most consider that to be bad business.

Then there is the whole host of other issues that go into fighting a case based on if the person "intentionally" answered that question wrong. So many things go into that issue... including the agent, which can often be a wild card issue... how many shady agents have glossed over medical questions before? Think carriers dont know the stats behind that? They are rolling the dice on if the agent didnt have a hand in the omission as well by bringing it to court.

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And despite if you or I think its right or wrong. The main point of my post was the fact that its established precedent in court cases already.

So to go against this in the way UoO did, makes little sense to me. They probably paid $250k in attorney fees just to fight a $500k claim that ended up being a $113,000,000 claim.... along with a lot of negative press.

They probably keep attorneys on staff.

 

[scagnt83]

They probably keep attorneys on staff.

I guarantee you they keep attorneys on staff. That doesnt make it free.

Man hours spent on a useless task is money wasted that could have gone towards a productive task.

 

[scagnt83]

There shouldn’t even be different rates for smokers and non smokers if that’s the case. Why would they only penalize the honest people with higher rates?

You are still assuming most people lie. And that its a major issue for carriers.

FE carriers have the lies already built into the premium from an actuarial standpoint.

FU carriers catch most of the liars with the medical check or doctor records.

You are upset over something that is a minuscule issue.

 

[LostDollar]

The thinkadvisor article said the jury was one vote away from a billion dollar punitive damage award. that would seem to me to be a good incentive for the insurance company to fight and attempt to establish case law as a future precedent for their position.

 

[Newby]

You are still assuming most people lie. And that its a major issue for carriers.

FE carriers have the lies already built into the premium from an actuarial standpoint.

FU carriers catch most of the liars with the medical check or doctor records.

You are upset over something that is a minuscule issue.

No I’m not assuming that most lie. My point is that is ONE lies he should not be rewarded for it. Clear and simple.

 

[scagnt83]

No I’m not assuming that most lie. My point is that is ONE lies he should not be rewarded for it. Clear and simple.

If they would have approved him regardless during the app process.
Why should he be denied during the claims process??

Even if you dont think most lie (ignoring the statements you made) you are still assuming this person lied and intentionally tried to deceive in order to benefit financially.