IPB 113: The Stumbling Blunders of Accordia Life Insurance Company aka Global Atlantic

Today’s topic is not so much about the mechanics of everyday life insurance but diverges into the seedy underbelly of the industry and the problems that certain transactions have caused. Well, one particular transaction is in the news as we speak and rightfully so.

We’re revisiting a topic that we covered six years ago, and there was doubt expressed even then. Saying that we predicted it would be wrong, but there was definitely some warranted skepticism.

Just recently, the state of California issued an order to “Show Cause and Accusation,” which could lead to a cease and desist against Athene and Accordia forbidding them from performing any new business practices in the state of California for failing to service over 50,000 policies in the state. Neither company is permitted to issue new contracts in the state, and this is not the only state breathing down their necks due to a huge mess of complaints.

Here’s a link to the order: http://www.insurance.ca.gov/0400-news/0100-press-releases/2018/upload/nr066-2018AccordiaOrder061218.pdf

To give you a timeline…following the financial fiasco in 2008, there were tighter regulations and increased oversight for insurers, leading many to transition out of the business. One of these was a European insurer, Aviva. Aviva wanted to exit the U.S. market, leading to a lot of speculation on who would buy.

Strangely, everyone the offers to buy were not insurance companies, but private equity. Ultimately, they were purchased by Athene, a company that had existed for a couple years prior (since 2009). Athene was formed with the intent to be developed as an acquisition operation, focused on financial service companies, specifically insurance companies, more specifically annuity-focused companies.

Almost immediately it looked as if they would divest the life insurance to Global Atlantic, which created Accordia Life. So, in 2013, Accordia Life acquired $10 billion in life insurance business and some 500,000 plus policies as a result based on our research.

Most of it seemed fine, and no one was very concerned. To be honest, it wasn’t a company we were likely to do business with anyway, and life insurance companies change hands sometimes, it’s typically not a big deal. The new company assumes the original contract, and the customer/client/insured writes premium checks to a company with a different name.

In late 2015 and into the beginning of 2016, suddenly customers who had policies with Aviva, subsequently Athene and now Accordia, complained that their premiums were not being drafted. Monthly premium payments are normally set up on an EFT, automatically drafted from a bank account. The contracts (particularly those with guarantees) have strict guidelines regarding the timeliness of premium payments. Essentially, the company has the right to rescind certain guarantees if premium payments are late.

This creates an obvious concern for policyholders who know this and are making every effort to pay their premiums, yet the company is refusing to take the premium. There was no option for policyholders to pay, not even by check, and those missing drafts accumulated to millions of dollars.

Athene/Accordia/Global Atlantic (truthfully a tangled mess that’s difficult to unravel) decided to farm out their customer service and policy service to a third party company, Alliance One. To be clear, based on our research, Alliance One is a debt collection and call center company with no apparent experience in the life insurance business. Companies like this are meant to be supplementary, but they were brought on by Accordia full time to deal with their customers and all of the service issues.

After doing some more digging, trying to solve these EFT problems for customers, we began to see articles and complaints about identical issues. And after a brush-off from the president of the company and months of unreturned emails from one of his employees, we started hearing the term “restricted status.”

What we learned was that the hiring of Alliance One caused a transition from Aviva’s old system to Athene’s new system—and the two didn’t wed well. It essentially meant that the new policies being sold would be fine, but those old policies would be subjected to manual processing. Hundreds of thousands of policies being manually processed is near impossible and made even more difficult as they were being serviced by a company with no experience or understanding of life insurance.

When I asked what would happen when their policies came out of restricted status, I was told that all the missing payments would be drafted immediately, all at once.

Based on the hundreds of complaints I can see online, these problems are epidemic and not isolated as the company suggests.  People who bought a policy from Aviva paying premiums via monthly EFT and who owned any sort of policy with a cash value were completely locked out of what those values were and with no access to the values for withdrawals or loans.

The cease and desist from California reads, “The department has received over a hundred complaints from consumers, stating that they are not receiving their statutorily-mandated annual reports or billing statements and are unable to pay premiums or access any policy benefits.

So, people were not getting access to their cash values in the Indexed Universal Life Insurance policies, and not providing annual reports.

Sure, there have been other insurance companies where service issues have occurred, and it was extremely frustrating for our clients and us. Sometimes we did have to sit down and run the numbers manually. That happened. But not on this scale.

And with this case, it took the regulators too long to get involved. Way too long, athene annuity and life company.

Athene did issue a statement basically claiming that this was Aviva’s fault and that none of these problems existed for their current policies. There was no apology or admission of guilt. Seems about right based on my interactions with them.

It certainly begs the question: if you’re (Accordia) not collecting premiums, where is the money coming from? What else do you have going on? New policies come with expenses that are covered by the revenue generated by the old policies. It just doesn’t add up.

Honestly, we don’t issue a lot of blanket statements but…

If you know about this, and you’re an agent selling policies from this company, we’re judging you. Maybe they can “right the ship,” and get things going in the right direction, but for now, that seems unlikely. They’d have to first admit that they’ve done something wrong.

Furthermore, any company (IMO, FMO, or BGA) that pushes product from Global Atlantic (the new name for Accordia) should be questioning their own ethical responsibility. You are asking for future problems if you know this how they treat their existing customers.

If you have had an experience with Accordia or Athene, we want to hear from you. You will not be quoted or have your identity revealed unless you want it to be. Please reach out to us.

Here a few resources that are mentioned in the episode:

Ownership of Athene Holding — https://www.nasdaq.com/symbol/ath/ownership-summary

Comments from Athene — https://www.nasdaq.com/press-release/athene-comments-on-recent-notice-from-california-department-of-insurance-20180613-00394

Bloomberg article — https://www.bloomberg.com/news/articles/2018-03-27/wall-street-linked-insurers-face-scrutiny-over-client-complaints

Press Release from California Department of Insurance — http://www.insurance.ca.gov/0400-news/0100-press-releases/2018/release066-18.cfm

 

6 thoughts on “IPB 113: The Stumbling Blunders of Accordia Life Insurance Company aka Global Atlantic”

  1. We opened a life insurance policy for my wife 3 years ago, and found out they a few months later they had not taken the money from our count by ETA, and we had to pay over $3,700.00 to reinstate. We then faced a period where they charged us twice in one month for $714.00 which was more than the agreed to premium. This was finally straightened out. Recently, we found out that the accumulated rate used to figure our 2% annual rate had been reduced by 50% because of 4 insurance rate fees that were increased because of age. Also, we found out two days ago that our policy was put on a restricted list because of conversion issues relating to the new company that had not yet been corrected. We could not get an answer of when policy was put on the restricted list, what it means to be placed on it–but one representative indicated in might have a bearing on final payment if death occurs because we have a policy where the premiums paid remain the same? Which could mean according to the contract could allow them to have the policy lapse.? Could not get to talk to a supervisor or officer to find out when the policy was put on the restricted list, when it would be taken off, what does it mean to the accumulated value we could earn, and why we were still getting invoices despite the fact we were on auto pay through our credit union that has been sending the payments on a regular basis prior to the date due. The customer representatives would flat out not allow us to talk to a supervisor. We did not understand that the 2% we could earn would be based on subtracted from the 4 insurance fees, one of which is the increased age of the policy holder, which is a tremendous bite.

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  2. my policy was originated in 1986. accordia has had it for 3-4 years. the billings are never regular and my quarterly payment went from$176.00 to 514.00. In nov. 2019 I received a annual statement for 2017-2018. after calling cs I was told it was in effect not to worry. jan 2020 received a billing for all of 2019. next day rececived one for $8,200 this did not have any explantion only that I owed $8,200. upon calling cs I was told policy had lapsed.i then called another number and was told not to worry they had no record of sending me a notice that policy would be about to lapse.they would research it.iam really concerned since the policy goes back to 1986. can anyone help me?

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    • Don, I would strongly encourage you to reach out to your state insurance regulators. They may be able to offer some assistance, or refer you to someone who can offer up more personal assistance.

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  3. I have Accordia Life Insurance for my husband and they have not automatically taken out my payment of $126 per month since Feb. of this year. What do I do?

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    • Hi Shirley,

      I would first contact Accordia and ensure that the policy is in force and inquire why they have not drafted the payment. Then I would ask when they plan to draft payments provided that the policy is in force and your situation is similar to the one that we’ve mentioned in this post and podcast. I would record the phone call. Don’t hesitate to let whomever you speak to know that you are planning to contact your State’s Department of Insurance if you cannot get resolution on the matter. Keep records of everything you do just in case. Sorry to hear that you are having to deal with this.

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  4. Dear Brantley –

    I’m so glad someone is finally addressing this and putting together information for us.

    I was sold a universal life index by Accordia maybe 10- 12 years ago. I had an under-informed insurance agent. Once I determined it wasn’t a permanent policy with steady payments, I wanted to replace it with whole life.

    I couldn’t reach anyone to ask for a replacement policy or how to convert, or what had happened to the $10,000 plus premium payments I had made.

    I called the call center a year ago, and much like the others experience, the gentleman on the other side of the phone munched his bologna sandwich while exclaiming, WHOOO-ee girl! It will be YEARS before we even get to a policy with those letters!

    Wow. Our system arrests people stealing food for their kids when welfare isn’t enough to put food on the table. But companies like Athene-Accordia-Global can de facto steal your money, feign confusion and innocence, and probably walk away without making their clients whole. They should share a cell with Wells Fargo!

    At any rate, I’ve given up and sort of assumed I’ve lost $10-$15k and will never get it back. I think the only thing that would make them listen is a class action suit.

    Thank you for aggregating the data on this matter!

    Reply

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