Jury Finds That Allianz Life Insurance Company Used Misrepresentation Or Deceptive Practice In Selling Its Two-Tiered Annuities


A four-year class action lawsuit brought on behalf of hundreds of thousands of American consumers against insurance giant Allianz Life Insurance Company of North America has come to a confusing and contradictory end, reported the Minnesota StarTribune in its October 14, 2009 article entitled, “A split decision in Allianz Life annuity lawsuit.” Or has it?

A Minnesota jury found earlier this week, on Monday, October 12th, that Allianz Life Insurance Company used a misrepresentation or deceptive practice in the course of selling its two-tiered annuities by falsely promising in its pre-sale marketing materials that consumers would receive a 10% “upfront” bonus when they purchased those annuities. In reality, the class action complaint alleged, the bonus was not “upfront” and was not available to policyholders for 15 years, if ever.

The jury further found that Allianz intended that others would rely on the misrepresentation or deceptive practice. Despite those findings, however, the jury surprisingly found that none of the approximately 340,000 policyholders in the class were harmed as a direct result of the misrepresentation or deceptive practice.

The jury apparently bought one of Allianz’s arguments that even if policyholders who purchased the annuities did not receive the promised “up-front” 10% bonus, a substantial sum in many cases, they were still better off financially than they would have been had they invested their money in the stock market. Akshay Rao, a marketing professor at the University of Minnesota’s Carlson School of Management and an expert who testified on behalf of the class at the trial, was quoted as asking “Does this mean a company can be dishonest and, because of an external event, get off scot-free?”

Page Perry name partner, Alan R. Perry, Jr., one of the three trial lawyers representing the plaintiffs and the class in the courtroom, stated: “The answer is, Allianz is culpable; the jury made that finding. We plan to ask the court to enjoin Allianz from future violations of the law and to force Allianz to make it clear through printed materials to customers that up-front bonuses may not be available for its two-tiered annuities.”

One lead plaintiff in the case was Linda Mooney, a 65-year old retired school nurse. She invested $216,189 in an Allianz two-tiered annuity after being promised that she would receive an “up-front” 10% bonus in the amount of approximately $21,600 that would largely offset the “surrender penalty” she incurred when she cashed out of her existing annuity.

This lawsuit was the latest of a number of lawsuits against Allianz for its sales practices with respect to its two-tiered annuities. According to the article, in February 2008, Allianz paid $10 million to settle a lawsuit alleging that it sold unsuitable annuities to thousands of senior citizens in California. In another case, Allianz agreed to return money to approximately 7,000 senior citizens who had purchased annuities since 2001.

“We are determined to protect consumers’ right to expect that two-tiered annuities and other products will not be sold by means of misrepresentations or deceptive practices,” added Mr. Perry.

Page Perry is co-lead counsel in the class action against Allianz. For more information on this cases and other annuity cases, please see our website.