Policyholders v Shelter Life Insurance Co.
Shelter Life Insurance Company Settles
A settlement in a longstanding lawsuit against Shelter Life Insurance Co. could mean refunds for thousands of policyholders. The proposed settlement stems from a class-action lawsuit filed last year in U.S. District Court in Kansas City. The lawsuit alleges that Shelter improperly raised premiums to increase profits by more than $10 million and concealed the rate hikes from policyholders.
According to documents filed in the case, more than 45,000 policyholders throughout 13 states are eligible for refunds that could exceed $5 million.
Shelter disputes all of the allegations and the estimate of eligible policyholders, but has agreed to settle to avoid additional legal costs said the spokesman for Shelter.
The lawsuit contends that premiums under the universal life insurance policies could change only if the underlying rating or "mortality" factors established at the inception of the policy had changed. Lawyers for Massey alleged those factors did not change, but higher premiums were charged.
"Litigation involving policy wording is common for the insurance industry. What we're trying to say we don't end up saying, and that's why we end up with litigation," said the spokesman for Shelter.
As part of the agreement, Moseley said, Shelter published a notice of the proposed settlement in a June edition of USA Today.
To be eligible to file a claim, policyholders must have owned a "flexible premium adjustable life" policy on Dec. 31, 1991, and after Jan. 1, 1992, with a face value amount of $25,000 to $249,000. Beneficiaries of payouts under the policies also are eligible to file a claim under the proposed settlement.
