TDI Announces Multi-State Regulatory Settlement Regarding
Insurance Sales to Members of US Military

Austin – Texas and Georgia Insurance Commissioners Mike Geeslin and John Oxendine announced today a multi-state settlement agreement resolving allegations of improper sales practices in the sale of life insurance products to members of the United States military. Under the agreement, 92,000 consumers, including 70,000 servicemembers, will receive cash or other benefits totaling $70 million. 

Texas and Georgia, together with the U.S. Department of Justice and the U.S. Securities and Exchange Commission, led a 20-month joint investigation into the sales practices of American-Amicable Life Insurance Company of Texas; Pioneer American Insurance Company; and Pioneer Security Life Insurance Company, all based in Waco, Texas. The state regulators and federal agencies claim that the marketing practices targeted young recruits and misled them into believing they were buying an investment product when in fact they were buying an expensive term life product that was coupled with a side fund and styled the “Wealth Builder” or “Horizon Life.” 

Nearly all of the soldiers already had up to $250,000 in low cost term life insurance provided and partially subsidized by the federal government through the Servicemembers’ Group Life Insurance Program. In settling the matter, the companies denied violating any state insurance or consumer protection laws.  To date, 42 states, the District of Columbia and Guam have signed on to the agreement.

Concurrently with the multi-state settlement, Patrick L. Meehan, the United States Attorney for the Eastern District of Pennsylvania, and the U.S. Securities and Exchange Commission announced separate settlements that provide relief common to that afforded in the multi-state agreement.

Under the settlement agreements the companies have agreed: 

• To make cash payments totaling $10 million to former and current servicemembers who were issued a “Horizon Life” policy from January 1, 2000 through July 28, 2006.  Approximately 57,000 servicemembers, including 10,000 who purchased in Texas, are eligible to receive this relief. 
• To increase the cash surrender value (CSV) for all inforce “Horizon Life” and “Wealth Builder” policies regardless of when the policy was issued or military status. Approximately 53,000 current policyholders will receive this benefit. The total settlement, including the increased policy benefits, is valued at approximately $70 million.

In addition to economic relief, the companies have agreed, among other things, to:

• Stop soliciting or selling any insurance product on a military installation for five years. 
• Stop selling the Horizon Life product after December 1, 2006.
• Immediately terminate any agent discovered selling company products on a military installation.
• Not accept any insurance application for Army enlisted personnel with the rank of E-1 through E-3 without proof the applicant has been counseled by a superior officer as required by Army regulations.
• Not possess, complete, submit, process or assist in the submission or processing of any DD Form 2558 (Authorization to Start, Stop or Change Allotment).
• Not establish any account or fictitious account in the name of its applicant/insured servicemember at a depository institution for the purpose of receiving funds for the payment of premium or use Treasury Form 1199A (Direct Deposit Sign Up).
• Not offer any gift with a value greater than $5 to any individual who has direct command authority over servicemembers who rank between E-1 and E-4.
• Not participate in or assist with any class, seminar or other training for servicemembers occurring on a military base, installation or reservation.

The settlement agreement can be found at www.tdi.state.tx.us.  Consumers who have questions regarding the settlement can call the companies’ Consumer Service Center at 1-800-736-7311.

Copy of Amico Agreement [ PDF 1,865kb ]

For more information contact: PIO@tdi.state.tx.us

Last updated: 08/03/2006