Two Life Insurers Back to Business in Florida After Resolving Issues With Regulator

Two companies that sell life insurance in Florida agreed to a consent order with the Florida Office of Insurance Regulation that will allow them to once again sell policies to active-duty members of the military.

American Fidelity Life Insurance Co., based in Florida, and Trans World Assurance Co., based in California, had been accused in January of technical violations of the state's Military Sales Practices Rule. The two companies agreed to pay penalties, costs and fees totalling $75,000 for American Fidelity and $175,000 for Trans World, the insurance office announced. The companies also agreed to refunds for their customers.

Charles Royals, president of Trans World, said that his company agreed to the arrangement, but only to get it behind them. "We vigorously disputed their allegations," he said. "It concerned a very technical aspect of the makeup of our product. We agreed to this consent order so we could resume sales in Florida." He said Trans World had already refunded its customers before being asked to -- though the total refund required was less than $500.

American Fidelity didn't immediately respond to a request for comment.

The state had determined that the firms' sales of the "Flexible Dollar Builder Life Insurance Policy" didn't credit interest properly and contained an early withdrawal penalty. The state also found that the insurers "did not conduct meaningful needs assessments and failed to provide effective rates of return."

In a statement, Florida Insurance Commissioner Kevin McCarty said, "Our office has been and will continue to be vigilant in protecting military personnel and all Floridians from unfair and deceptive business practices." His office said these two companies have re-filed their policies with the state and are now in compliance.

Trans World reported $12.7 million in net premiums written in 2008, according to BestLink. The firm has historically focused on the military market and serves customers in 47 states and a handful of countries with a U.S. military presence.

According to BestLink, American Fidelity has tailored its business to the military market for more than 50 years, representing over two-thirds of the company's sales. The company has also expanded marketing efforts to target municipalities, government employees, and business groups, hoping to create greater diversity in its business. It reported $14.6 million in net premiums written in 2008.

Both Trans World and American Fidelity have current Best's Financial Strength Ratings of B++ (Good).

(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)