Here are some claim samples under the Life Agents Program
Plaintiff invested $200,000.00 she inherited from her husband through our Insured’s services. During the years of 2000 to 2002, she lost of a little over $100,000.00 due to market fluctuations and world financial crisis. Plaintiff alleges her financial advisor did a poor job of protecting her capital and did not respect her low risk tolerance.
After 7 years before the courts, the cost incurred to defend this claim is $27,300 and insurer expects to pay another $31,000.00 before this case can be closed.
Our insured is a financial services firm who acted as a Managing General Agent through whom an independent life insurance agent sold a $1.4 million Universal Life Insurance policy.
To pay for the hefty insurance premiums, the agent recommended his client liquidate her investments and also take out a leverage loan against the equity of her property.
Plaintiff has had a change of heart and states she never needed nor wanted such a policy and that the advisor organized this scheme in order to obtain a large commission for himself. She is suing the agent, our insured’s firm as well as the life insurer.
Even if the main allegation targets the agent and the insurer, the insured firm is “caught” in the middle even if there are no specific allegations against it.
After 5 years of litigation, Lloyd’s has spent $47,100.00 to defend this case and expects to pay another $28,000.00 before this case can be settled through negotiations between the various parties.
The insurer based on the claimant’s false statement and general misrepresentations in the insurance application denied a $50,000.00 life insurance claim. Facts show the applicant responded by NO to the question: was the child born prematurely? That was indeed the case and the life agent had no reason to doubt that answer might be inaccurate.
Six months after the policy was issued, the child died of a congenital heart condition.
Insurer then discovered this false statement as well as other inconsistences in the insurance application. Claim was denied, policy cancelled and premium refunded. Claimant alleges she made a full disclosure and it is our insured that was negligent in filling in the application. Claimant is suing both the insured and the Life Insurance Company.
To this day, $24,600 has been spent to defend this case and file contains reserves of $25,000 to see this case resolved. Parties are currently negotiating in order to try and reach some mutually agreeable settlement nothing is clearly black or white; everything is a matter of interpretation and credibility.
Plaintiffs retained the services of our Insured with two specific goals: to obtain a partnership life insurance policy that would
1. Allow his estate to redeem the shares of the company owned by the deceased partner.
2. To achieve a tax-free retirement plan of some sort.
Consequently, the insured sold two $2 million dollar life insurance policies and realized a hefty commission in the process. Insured then learned from other advisors that said policy benefits were not tax-free. In turn, he cancelled the policies and the insurer agreed to do so and returned all the premiums except for $9,000.00 to coverage granted during the time the policy was in effect.
Initially, plaintiff claimed this amount from his advisor stating the policies never met with his specific requirements. Plaintiff has since amended his claim to $250,000 total in compensation for the alleged trouble and inconvenience.
The true value of this claim should not exceed $15,000 if we consider the capital, interest and costs on a $9,000.00 dispute. Even if competing financial advisors fuel this claim and damages are grossly exaggerated, the insured must still defend himself from these allegations of professional wrongdoing. To this day, Lloyds has incurred $66,000 in fees because plaintiff has chosen to litigate this matter to the fullest by multiplying expert reports and legal motions. Settling on economic grounds is not an option since plaintiff absolutely wants his day in court.
Plaintiff completed a critical illness and disability insurance proposal and the advisor correctly informed her that she would only be covered from the effective date of the policy if she did not provide immediately a cheque for the payment of the 1st month premiums in exchange for a cover note. Plaintiff clearly accepted the notion that she would only be covered upon deliverance of a cheque.
In the following weeks, the insurer asked for a medical report from Plaintiff’s doctor but the doctor failed to respond in a timely manner. So much so, the insurer notified both the advisor and the plaintiff. Some nine months later the situation was resolved and the policy was issued.
Upon reception, Plaintiff immediately filed a claim stating she had been diagnosed with a serious illness. Insurer denied the claim stating the condition was pre-existing and she failed to disclose such. Plaintiff has since filed a lawsuit against both the advisor and the insurer seeking $50,000 in damages.
Even if facts show the advisor did not commit any error, omission or negligence and that this dispute is truly between the plaintiff who obviously did make a full disclosure of pre-existing conditions as well as the insurer who may not have thoroughly analysed this risk before accepting to issue, the case will go to trial because plaintiff insists on having their day in court.
$27,800 in fees has been incurred to this day to defend the insured and another $15,000 is expected before we can expect a court ruling.
The insured was a duly licensed to sell life insurance and mutual funds. Over the years, he built a good client base and one day, solicited by a financial services firm, decided to offer private, guaranteed investments to his clients. These were promissory notes issued by a private company with a financial guarantee by a major Canadian bank.
Over time, the insured encouraged his clients to convert their mutual fund investments with him into these promissory notes that guaranteed a 10% rate of return but also a 10% commission to him. The insured did this systematically even if he was not licensed to do so and that the promissory notes themselves were unregulated securities that are completely illegal. Alleged guarantees and assurances were never verified. As it turned out, this was a massive Ponzi scheme that defrauded investors of sums in excess of $100 million.
Even if the advisor was banned for life and sentenced to heavy fines and community service for his violations, he was sued along with the insurer for a string of claims in excess of $4 million dollars.
Coverage was successfully denied but the insurer nonetheless incurred fees in excess of $480,000 to defend these claims seeking coverage for these illegal acts. Another $200,000 is expected to be paid out before all cases are resolved.
Plaintiff is suing her life agent, the MGA firm we insure and the life insurance for damages for an alleged breach of her privacy when the agent discussed her medical file with her father. In fact, the father is the one who always handled the life insurance request / application and follow up. When the insurer refused to modify one of the rating conditions because of information contained in the medical report (without revealing what that was), the agent informed the father and told him his daughter would need to provide written permission to the insurer so that they could release the details to her doctor. The firm simply passed on the information between the insurer and the agent.
Despite no medical details being released, the plaintiff is suing everyone for $300,000 in damages including breach of privacy, stress, exemplary and punitive damages. Plaintiff absolutely wants her day in court and refuses to recognize there is no substance whatsoever to her case.
Nonetheless, Lloyds has incurred $31,450 in defence costs to date and expects to pay another $30,000 to take this case to trial.
Insured operating his own firm purchased another mutual fund agent’s book of business. That person retired and later died. Five years later, a client of that agent asked to make another withdrawal from her funds just as she had done several times in the past with her former agent. She was in desperate need of money and despite being notified this would incur transfer, she chose to proceed. When she later found out the transfer fees cost $9,000.00 she decided to sue her current advisor and his firm for neglecting to adequately inform her of the consequences.
She refused all attempts to compromise and settle the claim through negotiation and even refused a $5000.00 offer. Our insured that acted reasonably and professionally insisted on a full defence because he could not be held liable for the original advisor’s inadequate information.
The case went to trial and the plaintiff was awarded the full amount claimed plus interest and costs. The reasoning: despite the plaintiffs insistence that she needed money quickly, it was the current advisor’s duty to warn her of all the consequences including the cumulative effect of those withdrawals done with the prior agent. In other words, our insured should have protected the claimant from herself.
This cost $15,555.00 in indemnity and $17,800.00 in costs to defend.
During their annual meeting, a client and his advisor agreed that three changes needed to be made in the various financial products (life and mutual funds). Proper forms were filled and signed for two of the three transactions. The third one was put on standby as both waited for instructions from the client’s chartered accountant regarding from which bank account the payments would be made: the personal bank account or the corporate bank account. The agent received the final instruction one month later on the eve of the Christmas holiday. Time passed and he completely forgot to send the change in banking information to the insurer. Because the client was out of the country, he did not receive in time the insurer’s letters warning that the policy would lapse and that it had indeed lapsed. Unable to re-instate his policy or find other coverage at a similar premium, the claimant sued the agent for $1 million; the value of his life insurance policy he lost.
The case settled out of court for $250,000.00 but cost $70,870 in fees to defend over a 4-year time span. Luckily the claimant did not die in the meantime since this omission would necessarily have cost $1,000,000.00.