The New York State Department of Financial Services has fined American Progressive Life & Health Insurance Co. of New York $260,000 for revoking life insurance policies without policyholders' consent.
An investigation found that the insurer from 2010 to 2019 canceled reduced paid-up life insurance policies with cash values of $500 or less and paid the cash value to 260 policyholders without their permission. Originally, the identified policies had a total face amount of about $2.3 million.
Under the regulator's consent order, American Progressive must present a restitution plan to policyholders or their beneficiaries for every violation. The insurer will determine what policies were canceled without consent and give those policyholders the option to put their policies back in force or receive additional payment for the difference between the surrender value previously paid and the reduced paid-up death benefit.
