This case is a pretty important case to keep an eye on. I believe we will see more and more of these cases when the huge flood of premium financed policies begin to mature in the next 1-10 years. We feel insurers will be doing heavy reviews before issuing death benefits…
Arguments were heard today in the appeal of the First Penn-Pacific Life Insurance Co. case. The suit has been closely watched in the life settlement market because of issues it raised about contestability of insurance policies and insurable interest.
Attorneys appeared before a panel of three judges of the 4th Circuit Court of Appeals in Richmond, Va., representing the carrier, the Life Insurance Settlement Association (LISA) and the escrow agent.
It is not known when a decision will be handed down.
First Penn, of Schaumburg, Ill., is appealing a June 2007 decision by Judge Andre Davis of the U.S. District Court of Maryland. Davis’s decision denied the carrier permission to rescind a policy because First Penn had failed to take action within the two-year contestability period.
The late Stanley Moore of Arizona had purchased a $2 million policy from the insurer, but failed to tell First Penn he had purchased several other policies and had falsified his medical records. First Penn also alleged that Moore participated in a stranger-originated life insurance (STOLI) scheme.
