Allianz Life Insurance Co. of North America and California’s insurance department have reached a settlement agreement over allegations that Allianz engaged in inappropriate fixed annuity sales.
Allianz Life will pay $10 million: $3.3 million to the California insurance department, $3 million to investments in the California Organized Investment Network, and $3.75 million, over a five-year period, to California’s Life and Annuity Consumer Protection Fund.
The agreement was reached after the California department of insurance’s market conduct examination results showed that Allianz Life had acted deceptively when it replaced 126 annuities for 84- and 85-year old senior investors.
Over 97% of the annuities sold to these investors from January 2004 through 2005 were considered “financially unsuitable” for their age group. The study also showed that Allianz had used deceptive marketing collaterals that promoted “up-front” and “immediate” bonuses.
In fact, no bonuses were pending unless the annuities were owned for five years. At that time, payments for life or over a 10-year-period would be made.
As part of the agreement, Allianz promised to conduct a suitability review program to improve procedures for dealing with elderly investors.
Allianz is now required to perform an elevated review of applicants older than 64, make a follow-up call to investors older than 75 who live in assisted living facilities, and ensure that all customers have a thorough understanding of any contracts made with Allianz.
By agreeing to settle, Allianz is not admitting that it violated any California laws.
Unfortunately, senior investors are easy targets of broker misconduct and deception. The stockbroker fraud law firm of Shepherd Smith and Edwards has helped many elderly investors and their families recover their losses.
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