Accordia Life and Annuity Company Lawsuit: Clapp and Cohen Cases

Lawsuits and regulatory actions against Accordia Life and Annuity Company trace to a single event: a 2015 technology conversion that froze roughly 500,000 life insurance policies Accordia had taken over from Aviva USA. The fallout produced a California Department of Insurance enforcement case, a nationwide policyholder class action that ended in uncapped remediation for about 530,000 policies, a $3.1 million class settlement for 79,000 insurance agents whose commissions were disrupted, and separate market conduct findings in Illinois and Pennsylvania.

What Went Wrong With the Policy Conversion

In May 2013, Athene Holding Ltd. acquired Aviva USA’s operations and simultaneously sold the life insurance block to a Global Atlantic subsidiary through a reinsurance arrangement.¹ That block, roughly 500,000 policies with about $10 billion in statutory admitted assets, ended up at Accordia, a Global Atlantic subsidiary created to administer it.²

Accordia hired Alliance-One Services, later a DXC Technology subsidiary, to migrate the policies onto Alliance-One’s proprietary platform. The migration was planned in two waves of about 264,000 and 278,000 policies. By late 2015, the legacy Aviva systems and Alliance-One’s platform proved incompatible. Policy data did not transfer accurately, and most affected policies were placed into “restricted” status, meaning they could only be handled manually rather than through automated electronic processing.³

For policyholders, restricted status meant automated premium payments stopped, annual statements could not be generated, and account values, loans, and surrenders were inaccessible.⁴ When policies were later unrestricted, some owners received bills for months or a full year of back premiums with no payment plan; if they could not pay within 60 days, the policy lapsed. Others were double-billed, hit with unauthorized bank drafts and overdraft fees, or saw policies lapse even though they had kept paying, because those payments had been lost or misapplied.³

The California Department of Insurance Case

On June 12, 2018, California Insurance Commissioner Dave Jones filed a formal Order to Show Cause and Accusation against Accordia and Athene Annuity and Life Company. It covered more than 50,000 California policies and was built on more than 100 consumer complaints received since early 2016.⁵

The department alleged violations of California Insurance Code sections 704, 790.03, 790.035, 790.05, 790.06, and 10509.959, including unfair competition, deceptive acts, and failure to carry out contracts in good faith. It asked for revocation of the companies’ certificates of authority for up to one year, a cease-and-desist order, fines of up to $5,000 per act (or $10,000 per act if willful), completion of the conversion for all remaining restricted policies within 30 days, and relief for policyholders whose coverage had lapsed because of administrative errors.³

As of June 2018, several hundred California policies were still restricted, and Accordia told regulators an unknown number would likely stay that way and require manual administration indefinitely.³

The Policyholder Class Action: Clapp v. Accordia

In April 2017, Larry Clapp, Daryl McCleary, Mary Jones, and later Robin McGuire filed a class action in the U.S. District Court for the Central District of Illinois against Accordia, Alliance-One, and Global Atlantic. The case, Clapp et al. v. Accordia Life and Annuity Company et al., No. 2:17-cv-02097, alleged that the defendants stopped automatically withdrawing, accepting, or applying premium payments during the conversion, causing lapses, service failures, and income tax problems.⁶⁷

On June 7, 2019, Judge Colin Stirling Bruce granted preliminary approval to a settlement covering roughly 530,000 interest-sensitive life insurance policies issued or assumed by Accordia, specifically those issued from May 1, 2014 through June 7, 2019, or converted to the new administration system on or after August 1, 2015.⁷

The settlement had no cap. Instead of a fixed fund, Accordia was required to conduct an automatic, retroactive review of every class member’s policy and correct status, classification, premium, interest, and lapsation errors caused by the conversion. Class members who did nothing still received the remediation. Anyone who believed they were owed more could file an individual claim for additional cash. Reporting on the deal put approved attorneys’ fees at $2.2 million.⁸ The case was terminated on June 23, 2020.⁶

The Agent Commission Class Action: Cohen v. Accordia

Agents were hit too. In November 2018, David Cohen filed a class action in the U.S. District Court for the Southern District of Iowa against Accordia and Alliance-One (Case No. 18-cv-00458), alleging breach of contract, breach of the implied duty of good faith and fair dealing, and negligence. According to the complaint, the defendants failed to pay renewal commissions, mismanaged the conversion in ways that caused policies to lapse or convert to lower-commission products, and failed to properly collect or process premiums.⁹

The case settled for $3.1 million on behalf of 79,000 life insurance agents. Payments went out automatically without claim forms. Individual payouts reached as high as $55,400, calculated under two models: one paying interest at 4% on commissions delayed more than 60 days, the other paying every agent who served as agent of record for at least one affected policy based on how many days they held that role. The settlement also required Accordia and Alliance-One to pay all outstanding commissions with 4% interest, hire an independent auditor to review commission systems, conduct a two-year review of future commission payments, and issue more detailed commission statements.¹⁰

Illinois and Pennsylvania Regulatory Findings

Illinois regulators examined Alliance-One’s market conduct from 2015 through 2019. Examiners found that Alliance-One failed to maintain accurate policy records during the migration, leaving policyholders with inaccurate statements or none at all, and cited the company for failing to respond to regulator complaints on time, failing to pay claims promptly, and failing to notify beneficiaries about interest owed on delayed claim payments. Alliance-One’s management told examiners that “history and changes to procedures are not maintained.” The examination closed in March 2022 after the company submitted proof of compliance.¹¹

Pennsylvania examined Accordia itself for 2021 and issued a consent order on May 18, 2023. Findings included incomplete complaint logs, missing written disclosure documentation, 15 separate violations for failure to maintain required books and records, and altering an application without the applicant’s written consent. Accordia paid $75,000 to resolve the matter.¹²

Individual Lawsuits and Their Limits

Not every claim against Accordia has succeeded. A California state case involving a lapsed policy ended with Accordia winning a demurrer on all four counts, the court finding the statute of limitations had run and the plaintiffs had failed to state a claim; punitive damages allegations were struck, and after amendment, two more claims were dismissed without leave to amend.¹³ In Griffin v. Accordia Life and Annuity Company in the Southern District of Alabama, a policyholder alleged an agent had fraudulently misrepresented policy terms during a 2002 sale; the court dismissed the fraud claims with prejudice as time-barred under Alabama’s two-year statute of limitations, and kept a breach of contract claim against Accordia.¹⁴ Older claims tied to policies sold long before the 2015 conversion can run into limitations problems that class members did not face.

Where Accordia Stands Now

Global Atlantic created Accordia in 2013 as the vehicle for the Aviva book. In February 2021, KKR & Co. completed its acquisition of Global Atlantic in a deal valued at about $4.7 billion, taking roughly 60% ownership while Global Atlantic continued to operate under its existing leadership.¹⁵

In June 2023, Global Atlantic announced it would stop selling new indexed universal life policies through Accordia as of July 1, 2023. Co-president Rob Arena tied the decision to declining sales, saying IUL business had fallen from 16% of the company’s new individual markets business in 2013 to less than 3% by 2023. The affected products included the Lifetime Builder ELITE, Global Accumulator IUL, and Lifetime Foundation ELITE. Global Atlantic said existing policyholders would continue to be serviced.¹⁶ As of December 31, 2021, Accordia was licensed in every state except New York, plus the District of Columbia.¹²

1
Athene Holding Ltd. Athene Announces Sale of Life Business Associated With Aviva USA Acquisition
2
U.S. Securities and Exchange Commission. Athene Holding Press Release Regarding California Order to Show Cause
3
California Department of Insurance. First Amended Order to Show Cause, Notice of Hearing, and Statement of Charges
4
Los Angeles Times. California Insurance Regulator Takes Action Against Accordia and Athene
5
California Department of Insurance. Commissioner Jones Takes Action Against Accordia Life and Athene Annuity
6
CourtListener. Clapp v. Accordia Life and Annuity Company
7
ThinkAdvisor. Federal Judge Gives Preliminary OK to Accordia Class Action Settlement
8
Law360. Accordia Life to Settle Suit Over No-Lapse Policies
9
CAFA Notices. Cohen v. Accordia Life and Annuity Company Class Action Complaint
10
Berger Montague. Accordia Insurance Agent Unpaid Commissions Class Action Settlement
11
Illinois Department of Insurance. Alliance-One Services Market Conduct Examination Report
12
Pennsylvania Insurance Department. Accordia Life and Annuity Company Market Conduct Examination Final Report
13
Faegre Drinker Biddle & Reath LLP. Chamorro Ildefonso, Alan – Experience
14
FindLaw. Griffin v. Accordia Life and Annuity Company
15
Global Atlantic Financial Group. KKR Closes Acquisition of Global Atlantic Financial Group Limited
16
InsuranceNewsNet. Global Atlantic to Stop Selling New Fixed Indexed Universal Life Policies