Insurance companies wield huge financial might and political influence. They also have immense power in their relationships with the insured.
Although they owe legal duties to their policyholders, including the duty to act in good faith, insurance companies also owe a duty to their shareholders to maximize profits. At times, these duties conflict, leaving policyholders high and dry while insurance executives line their own pockets.
Milberg attorneys have the tools, resources, and experience needed to fight on behalf of plaintiffs wronged by insurance company malfeasance. The diverse backgrounds of our attorneys provide a depth of knowledge of the inner workings of the insurance industry. Throughout our history, Milberg has consistently adapted to evolving changes in the insurance market as the industry has grown more consolidated and complex.
Milberg’s Insurance Practice Group
Milberg’s Insurance Practice Group attorneys have led numerous class actions in the 1990s and early 2000s against insurance companies selling whole and universal life insurance policies based on misrepresentations about the expected performance of those policies. Milberg attorneys have also led cases against major insurance companies including MetLife, Prudential, Farmers, and the Life Insurance Company of Georgia. The dozens of insurance cases led by our attorneys have resulted in billions of dollars in recoveries for our clients.
These cases, which have changed the way insurance is sold, were cited in model regulations of the National Association of Insurance Commissioners designed to prevent the recurrence of those practices. As a direct result of our litigation, insurers were forced to stop making false promises about premium payments, stop charging higher prices to minorities, and stop churning policies to accumulate additional sales.
Insurance Companies, “Too Big to Fail?”
The insurance industry is one of the largest industries in the United States, with annual revenues exceeding $1 trillion. There are more than 6,000 insurance companies in the United States alone.
“Too big to fail” is a title most often associated with big banks. But in the wake of the 2008 financial crisis, insurance companies—AIG, MetLife, and Prudential—were also named “systematically important” financial institutions.
While these insurers have had their “too big to fail” label removed, the size of big insurance companies—which are getting bigger and commingling with private equity—remains concerning. The ten largest U.S. insurance companies account for nearly a third of the industry’s global market cap of $3.23 trillion. Dozens of insurers appear on the annual Fortune 500 list. And over the last several years, there has been a “megawave” of insurance sector consolidation, leading to less competition and higher prices.
Consolidation in the health insurance sector, for example, has led to insurers recording record profits—even as providers report huge losses. The property and casualty insurance sector has also seen a flurry of consolidation. Life and annuity products, the third main insurance sector, has seen strong merger and acquisition activity as well.
In an even more worrying development, private equity firms have been increasingly investing in insurance companies. These deals strengthen the ties between insurers and Wall Street, while exposing policyholders to risk.
Without regulatory oversight, private capital investment in life insurance and annuity companies could endanger workers’ retirements, according to U.S. Senator Sherrod Brown of Ohio.
While investment firms might benefit from huge profits in the short term, failure to adequately manage these risks may ultimately cost policyholders their retirement incomes.
Insurance Bad Faith
When insurance companies engage in bad faith practices, they may be subject to legal action. Milberg uses its skills and experience litigating against insurance companies to help policyholders recover the payments they are entitled to under their policies.
Some of the most common reasons why insurance providers are sued for acting in bad faith include:
- Raising premiums or assessing fees in breach of the policy’s terms
- Offering the policyholder a settlement worth significantly less than what their claim is actually worth
- Not disclosing policy limits
- Claiming the policy does not cover certain damages that are actually covered
- Failing to investigate, pay, or deny a claim within a reasonable time frame
- Failing to respond to a time limit demand
- Denying a claim without a just reason
- Not performing a complete or timely claim investigation
- Failure to communicate crucial information to the claimant
- Failure to enter into any type of claim settlement negotiations
Milberg’s attorneys have handled hundreds of insurance-related disputes, including first party bad faith insurance cases, business interruption cases, and hurricane insurance cases. Our attorneys have also lectured, written, and taught continuing legal education courses on insurance-related topics. As one of the nation’s top class action law firms, we are well-positioned to pursue insurance bad faith cases on a statewide or nationwide basis.
Notable Cases & Recent Recoveries
- $4 Billion Settlement: Serving as Lead Counsel, Milberg recovered more than $4 billion for policyholders in a landmark case challenging Prudential’s insurance sales practices.
- $1.7 Billion Settlement: Milberg represented millions of MetLife policyholders who alleged that the insurer used deceptive sales practices for the purpose of generating additional, unnecessary commissions.
- $45 Million Settlement: Milberg was Lead Counsel in a lawsuit that accused the Life Insurance Company of Georgia of routinely charging black customers higher life insurance premiums than white customers. In addition to a class action settlement worth millions, the lawsuit helped put an end to discriminatory insurance practices.
- $59 Million Settlement: Milberg attorneys represented MetLife policyholders who claimed that the insurance company breached its contract and engaged in other misconduct by selling long term care policies with a “Reduced-Pay at 65” option, then increasing the premium after the age of 65.