The state of California commenced a lawsuit against American General Life Insurance Co., Transamerica and other life insurance companies.
The enforcement action alleged the defendants purposefully left out warnings of pending lapses or terminations, and did not notify beneficiaries when they could make a claim.
The case, brought on behalf of the People of the State of California by San Diego City Attorney Mara W. Elliott, claimed the insurance companies' alleged motivation was to raise profits.
"Put simply, insurers make money when policies are dropped or forgotten about," the lawsuit claimed. "These tactics, though, are illegal."
In California Superior Court for San Diego County, the case was filed against American General Life Insurance Co., Lincoln Benefit Life Co., Everlake Life Insurance Co. and Transamerica Life Insurance Co.
"This lawsuit is a wake up call to the life insurance industry," Elliott claimed. "Californians expect you to follow the law, not to exploit a beneficiary when a loved one has died, or an owner who is incapacitated. The industry's antics are unlawful, and we will do all we can to hold them accountable and get relief for those they've harmed."
The insurance companies did not respond to requests to comment.
The plaintiff claimed the defendants violated the anti-lapse provisions of Insurance Code Sections 10113.71 and 10113.72 and the Unclaimed Life Insurance and Annuities Act at Section 10509.940.
