Annuity Surrender Charge/MVA Disclosures Held Insufficient in California


On September 29, 2010, the U.S. District Court for the Northern District of California granted partial summary judgment against defendant American National Insurance Company (ANICO) on claims challenging the adequacy of ANICO’s disclosures to senior citizens with respect to its deferred annuities, including disclosures relating to the Market Value Adjustment (MVA). Rand v. Am. Nat’l Ins. Co., C 09-639 SI (N.D. Cal. Sept. 29, 2010). (Please click here for the opinion.)

Plaintiff alleged in a putative class litigation that Defendant violated California’s Unfair Competition Law by failing to comply with the senior citizen disclosure obligations contained in California Insurance Code Sections 10127.13 and 10127.10. In its September 29 Order, the court granted summary judgment in favor of Plaintiff as to the claim that Defendant’s failure to disclose, on the cover page, the MVA and the death-related surrender charge violated California Insurance Code Section 10127.13. The court also granted summary judgment in favor of Plaintiff as to the claim that Defendant violated the insurance code by providing an inadequate disclosure that did not list the page numbers of the policy that showed surrender charges. However, the court granted partial summary judgment in favor of Defendant as to the claim that Defendant also violated Sections 10127.13 and 10127.10 by placing the notices required by those sections on the inside of the policy jacket instead of stamping them on the front page of the policy jacket. The court rejected Defendant's argument that prior insurance department approval of the policy form precluded the court from determining whether Defendant violated the California Insurance Code.

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