The Allianz Life Insurance Company, California’s largest seller of annuity products, has agreed to a $10 million settlement with California Insurance Commissioner Steve Poizner’s office for allegedly targeting thousands of senior in deceptive annuity sales.

Seniors duped

According to a press release from the California Department of Insurance (CDI), Allianz “purportedly deceived elderly victims into purchasing confusing annuity products that were financially unsuitable for their needs.” CDI provided the following examples of what happened to two seniors as a result of Allianz’s actions:

• One victim was 85 years old when she was induced by Allianz to liquidate her existing annuities and pay a surrender charge of over $51,000. This victim did not understand the terms of the new annuity that was aggressively sold to her by an Allianz life agent.
• Another 85 year-old victim liquidated two existing annuities to purchase an Allianz policy and obtain the bonus represented to the senior as ‘immediate.’ After attempting to withdraw a large sum of money from his annuity, which an Allianz life agent told him was possible, this victim was informed that he would incur a sizeable surrender charge.

A settlement with future protection

Although the insurer will pay $10 million to settle the matter with CDI, Poizner has also instituted a program to insurer that seniors are protected in the future. The program, a first in the state, requires Allianz to:

• Conduct an elevated review on all applications submitted from specified individuals 65 years and older
• Follow up by telephone with all applicants seventy-five years of age or older, and those living in assisted living facilities, to confirm their thorough understanding of the purchased product
• Amend annuity contracts to make them more understandable to consumers
• Clearly, plainly, and conspicuously disclose the terms of premium bonuses being offered
• Allow seniors impacted by Allianz's supposed unsuitable annuity sales, and named in the Order to Show Cause/Accusation and Notice of Hearing, to request the cancellation of their annuities

Allianz not the first to scam seniors

Allianz Life was not the first insurer to scam seniors. In 2007, California’s Attorney General, Gerry Brown, and Insurance Commissioner, Steve Poizner, announced a $7.2 million settlement between the state and American Investors Life Insurance Company, Family First Advanced Estate Planning and Family First Insurance Services after the companies scammed seniors into buying annuities.

To view CDI’s press release, go to: www.insurance.ca.gov/