Lawsuit Filing Against Monarch Life Insurance

On May 9, the government seized Monarch Life Insurance Company. State regulators say they have seized control of the insurer that handles millions of person policyholders' Social Security and Medicare accounts. It says it is liquidating its assets to protect the company from possible claims against its financial parent.

The move comes as insurer Monarch Life Group Inc. is under pressure to recover from the fallout of a probe by the U.S. Social Security Administration. A federal grand jury investigation found that Monarch had improperly denied disability benefits to applicants who claimed to be unable to work. The insurer denies wrongdoing.

The seizure of Monarch life insurance company follows a similar move last year by the state of New York, which bought out the insurer's holding company in the state. In that transaction, New York acquired a majority of the company's holdings. New York's insurance commissioner had urged investors to sell the holding company. A number of insurer companies are considering selling assets or getting out of the United States in the wake of recent events.

For years, the life insurance industry has been beset by a scandal-plagued history of fraudulent claims. The number of fraud claims filed each year has declined steadily, but claims by consumers are on the rise and insurance firms are finding that the market is not quite as safe as it once seemed.

In a statement, the life insurance agency said that it will continue to pursue its clients until it finds a way to keep operating. It also announced plans to sell its business unit to an investment firm.

According to the lawsuit, the insurer King and Spalding sold its holding company to Monarch in a $4.5 billion deal. King and Spalding were formed in 1970 and is now known as the Life Insurance Company of America. A King and Spalding spokesman did not immediately return a call seeking comment. Monarch and the New York State Insurance Department did not return phone messages left with them.

As for the sale, the state's Insurance Department has scheduled a public auction to raise the funds needed to pay off Monarch life insurance's outstanding debt. The agency has asked other insurers to help raise the required capital. In addition, the department is requesting insurance companies and banks to give the state cash advance funds for a trust that can be used to pay off Monarch if the company cannot continue operations.

In a statement, the company said it had taken the action to "provide a secure and stable environment for our clients and to protect the investment of our shareholders." Monarch's statement says the firm has maintained all policies and practices necessary for maintaining its clients' interest, including maintaining the integrity of its investment portfolio. The statement goes on to say that the company has been complying with the demands of the state's investigation and that it will cooperate fully with the sale.

Many industry observers agree that the state's action against the life insurance industry is a necessary step. "I think it is a fair thing to take," said Larry Kudlow, a former insurance commissioner of New York state. "It does help put some of the fears of the consumer to rest."

According to the lawsuit filed against Monarch by the state said that the firm repeatedly lied about a claim against a customer. The state said that Monarch made repeated false claims against a customer and that the insurer violated the law when it failed to disclose that the claim to its clients.  egg-insurance.com  said that the firm violated state law when it failed to disclose that it had paid millions of dollars in legal fees to a firm that represented the client after a claim. The company was also found guilty of failing to notify a customer of a change in ownership of a policyholder.

According to the lawsuit, the insurer King and Spalding sold its life insurance company to Monarch when a high percentage of its customers did not have enough life insurance to meet their obligations. The lawsuit said that the company also made a large profit at the expense of some policyholders who did not qualify for more expensive coverage.

The lawsuit further says that the insurer sold a large number of policies to companies whose businesses were not in direct competition with Monarch, thus allowing it to obtain a competitive advantage. As a result, it is now able to pay higher premiums than many other life insurance companies.