Life Settlement Firm Sues John Hancock Over UL Cost-of-Insurance Increases

The Suit

Skellig and Wilmington Trust allege in the complaint that John Hancock Life of New York reviewed 4,000 Performance UL policies and told its agents in May 2018 that it would increase cost-of-insurance charges for 1,500 of those policies, without explaining how it had selected the 4,000 policies reviewed, or the 1,500 policies subject to COI charge.

The Skellig Performance UL policy affected was issued in 2008.

The increase letter stated only that the issuer’s “expectation of future experience has changed,” according to the plaintiffs.

The plaintiffs contend that, between 2008 and 2018, there was no evidence that mortality or policy lapse rates had changed enough to justify big COI rate increases. In, fact, the complaint alleges that since John Hancock began issuing such policies in 2003, mortality rates have improved and any adjustments should have resulted in decreased COI rates.

According to the complaint, “Given this consistent trend of improving mortality expectations, John Hancock should have decreased COI rates on Plaintiffs’ Policies. Instead, it raised COI rates dramatically, allegedly based on worse mortality expectations than those at issuance. Even if John Hancock had some decline in its mortality expectations, contrary to the industry, that decline could not be close to warranting the massive COI Increases seen here.”

The plaintiffs are asking the court to declare the COI rate increase to be improper, put any excess premiums the Gannet Life Settlement Fund has paid back in the policy value and set guidelines for any future John Hancock COI rate increases.

The plaintiffs are also asking for compensatory damages.

Pictured: The Daniel Patrick Moynihan U.S. Courthouse in the Southern District of New York. (Photo: Ryland West/ALM)