Queens Village woman taken for a ride

The life savings of an 83-year-old Queens Village woman were nearly cleaned out when her neighborhood bank sold her a life insurance policy with a staggering $40,000 a year premium - and they surely would have been, except for the New York State Insurance Department.
Every year, 55,000 of New Yorkers who feel bulldozed by their insurance company file a complaint with the department. They run the gamut from life, health, auto and virtually every other type of insurance policy and range from disputes over insurance settlements to the terms of a policy’s coverage.
“When we investigate complaints, the Department seeks to address the individual consumer’s problem and we also determine if broader issues are involved,” said State Insurance Superintendent Eric R. Dinallo.
A classic example of “broader issues” surfaced not long ago, when a policyholder complained that his insurance company had arbitrarily cancelled his annuity. An investigation found that the company had violated state law, which says that only the holder of an annuity may cancel it.
The investigation stemming from that single complaint found the insurance company had improperly cancelled the annuities of more than 200 other people.
In the end, the company agreed to reinstate the annuities and reimburse those policyholders for their losses.
“People buying insurance need to understand what they’re getting into before they sign on the dotted line,” Dinallo cautioned.
The Queens Village woman’s problem began when she went to her neighborhood bank looking for a reference to a lawyer to draw up her will. Instead of getting advice, she left the bank after unwittingly agreeing to buy the pricey life insurance policy.
Months later, after realizing that the premiums would clean her out, the woman contacted her only living relative. She told him she was pressured into buying the insurance policy.
Her nephew, and later an attorney representing her, tried repeatedly - and unsuccessfully - to get the policy canceled.
The bank, which earned a $22,000 commission on the sale, and the insurance company stonewalled, saying nothing had been done improperly. The 30-day window to cancel the policy had long since passed.
When the Insurance Department investigated at the attorney’s request, they found that disclosures required under state law had not been made to the woman when the insurance policy was sold.
The finding prompted the insurance company to cancel the woman’s policy and return nearly $80,000 she had paid for premiums, along with other expenses she had incurred.
Dinallo cited other examples, from the retroactive termination of a fired employee’s health insurance, to a company shortchanging a fire-policy holder who they said was “over-insured,” even though they had inspected the house and never warned him about it.
He wants to tell people, “If they do have a problem, they need to know the Insurance Department is here to help.”
Consumers who believe that an insurance company, broker, agent or adjuster has failed to act in accordance with an insurance contract may file a complaint with the Department.
On-line complaints may be filed at any time by accessing their web site at www.ins.state.ny.us. The Department’s Consumer Services Bureau can be reached between 9 a.m. and 4:30 p.m., Monday through Friday, toll-free at 800-342-3736.