Court update: Allianz Life faces bevy of lawsuits over July data breach

Allianz Life Insurance Co. of North America faces several lawsuits related to a July data breach that affected 1.4 million people.

The lawsuits, filed in the District of Minnesota federal court, all claim that the insurance giant failed to treat plaintiffs’ personal data with proper security measures. Allianz Life is headquartered in Minneapolis.

In a late-July regulatory filing, Allianz reported that hackers stole the personal information of the majority of its customers, financial professionals, and select Allianz Life employees in the United States.

The data breach, described by Allianz as a hack, occurred on July 16 and was discovered on July 17, the filing said. The breach allegedly exposed personally identifiable information, including Social Security numbers, and financial information stored in an unencrypted database.

Had Allianz “employed basic, long-established, and recommended security tools, the Data Breach should have been easily thwarted,” stated Michael Roaldi, of Holmes Beach, Fla., and Beth Satterthwaite, of Virginia Beach, Va., in their lawsuit filed Aug. 13. “However, Defendant did not employ best practices for data security.”

A spokesman for Allianz said the insurer does not comment on litigation. The insurer told Reuters in July that it notified the FBI and, based on its own investigation, that there is no evidence that the Allianz Life network or other company systems were accessed, including their policy administration system.

'A scheme to gain access'

One of the cases filed in Minnesota over the past six weeks is the Roaldi-Satterthwaite lawsuit, in which the plaintiffs seek class-action status. It is likely the lawsuits will eventually be consolidated into one action for the class.

Plaintiffs point out studies, reports, and advice Allianz released over the past decade concerning cybersecurity risks.

“Allianz has stated that the breach was due to [a] ‘social engineering technique’ that often involves a scheme to gain access,” the lawsuit states. “Even though Allianz has stressed (at least as early as 2015) the ten steps a company should take to protect itself, Defendant did not sufficiently secure its own system and/or ensure that any CRM system was properly vetted for cybersecurity.”

Roaldi and Satterthwaite seek “declaratory and injunctive relief, monetary damages including punitive damages, equitable relief, and all other relief authorized by law.”

Class certification reversed

In other court news, Progressive Direct Insurance Co. won a victory Monday when the Fourth Circuit Court of Appeals reversed class certification in a lawsuit over vehicle valuations.

The Fourth Circuit reversed the district court’s decision to certify a class on behalf of policyholders who alleged that Progressive Direct underpaid them for totaled vehicle claims.

The appellate court found that the plaintiff lacked the required concrete injury. She had received a payment from the insurer, was not out-of-pocket beyond her deductible, and did not prove that her vehicle’s value exceeded the amount she was paid, court documents say.

Even if standing had been established, the court found that class certification was inappropriate. Determining whether Progressive breached its obligation to pay “actual cash value” would require individualized analysis of each claimant’s vehicle and circumstance—thus failing Rule 23's requirements of commonality and predominance.

Progressive, as well as other leading vehicle insurers, has been the target of multiple class-action lawsuits regarding its valuation methods for crashed and totaled vehicles, particularly its alleged practice of artificially lowering the actual cash value (ACV) offered to customers.

The Fourth Circuit decision to reverse class certification follows a similar July 23 decision from the Seventh Circuit in a separate lawsuit challenging totaled vehicle values.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.