Life insurers that defend challenges to their exercises of
discretion to adjust cost of insurance (COI) rates on universal
life insurance policies continue to seek opportunities to narrow
the scope of the claims through early dispositive motions. In May,
an Ohio federal district court partially granted a defendant
insurer's motion to dismiss, providing a recent example where
an insurer had some success with this strategy. In Farris v.
U.S. Financial Life Ins. Co., the plaintiff, the trustee of a
trust that purchased the subject policy in 2001, alleged that the
insurer increased the COI to rid itself of liabilities and recoup
prior losses, allegedly contrary to the permissible bases the
policy articulated. In her putative class action complaint,
plaintiff asserted six claims: breach of contract, breach of
implied covenant of good faith and fair dealing, unjust enrichment,
conversion, fraudulent misrepresentation, and fraudulent
suppression.
