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

 

About the Author Brantley Whitley

Brantley is a practicing life insurance agent and has been for over 18 years. After years of trying to sell like his sales managers wanted him to, he discovered that people want to buy life insurance if you actually explain the benefits.

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