State settles with insurance company for $300,000 over supervisory lapse

he Department of Financial Regulation has reached a $300,000 settlement with Lafayette Life Insurance Company after the company failed to obtain key financial and background information from customers to make sure its products were appropriate.

DFR Commissioner Michael Pieciak said of the company’s 163 annuity transactions in the state over a five-year period, 162 customers opted out of self-reporting the information. He said this information includes questions like how many assets customers have, how liquid their assets are, or how soon they would need the money from a claim.

Pieciak said his department didn’t actually find any customers in Vermont who were sold inappropriate policies, but that the company’s practices created that risk. He gave an example of someone approaching retirement age being sold a policy that they couldn’t access for five or 10 years to demonstrate how not having this information could cause problems.

In addition to paying the penalty, Lafayette will also make improvements to its supervisory procedures, including annual training and enhanced reporting.

Read more: https://vtdigger.org/2019/04/01/state-settles-insurance-company-300000-supervisory-lapse/