An Indiana-based life insurance company has been barred by a federal judge in Los Angeles from tripling policy rates on some life insurance policies, but Conseco Life Insurance says it plans to appeal.
According to Judge A. Howard Matz, the proposed increase's size constitutes a breach of contract, and an attorney for the policyholders, Andrew Friedman, told Investment News it would have devastated his clients' finances.
"These rate increases wouldn't have hit until year 21. These are people who have paid dutifully for 20 years and have the rug pulled out from under them," Friedman told the publication.
A requirement from the Indiana Department of Insurance is behind the proposed large-scale increase. The state regulator said Conseco needed to add $100 million to its available reserves to meet solvency standards.
Investment News reported the company was facing bankruptcy earlier in the decade after problems in its acquisition of mobile home insurance company Green Tree Financial Corporation, and that the Indiana authorities had raised the question of whether Conseco was in a position to meet its obligations.