Coventry Direct is a marketing affiliate of Coventry First created to market directly to life insurance policy owners the prospect of entering into a life settlement transaction with Coventry First. You will find additional information and related news at the links below.
" Coventry “prey[ed] on” policyholders through two main schemes, the attorney general's office alleged. First, Coventry paid off brokers and other potential purchasers to reduce bids, enabling it to buy policies for far less than they were worth and resell them at profit, the complaint said. [...] In its second scheme, the attorney general's office said, Coventry breached its fiduciary duty by regularly reserving a high percentage of the purchase price — in some cases more than 50 percent — as a commission."
Coventry First LLC, a Life Insurance Settlement Purchaser has agreed to pay the sum of $1.4 million to consumers and 10.6 million to the state of New York for the settlement of a suit from the attorney general’s office in which there were accused of misleading business practices.
Coventry, a subsidiary of The Coventry Group Inc. has been sued by Eliot Spitzer, the then attorney general. Spitzer alleged that Coventry had deceived policy holders into buying the company’s insurance covers at below the market value. This first complaint was made at the Supreme Court of New York.
According to Spitzer, the Life Insurance company have a business practice referred to as “life settlement”, whereby they (Coventry) arranges a deal for other companies and investors to purchase life insurance policies from their holders and then make money off the policies when the policy holders die.
The complaint has it that policies are gathered and then sold to investors at a later date.
The attorney general’s office alleged that Coventry “preyed” on its policy holders through two different methods.
Firstly, Coventry will pay off brokers, as well as other intending buyers to reduce the bids, thereby making it possible for them to buy policies at a lesser value and subsequently resell them for profit.
“Coventry offered $880,000 in October 2004 in return for [an] 80-year-old woman's life insurance policy, which would pay $4.9 million on her death,” Spitzer said. “Shortly thereafter, Coventry offered [potential competing purchaser] Allsettled Group Inc. a $49,000 'fee' to suppress [its] competing bid, sending Allsettled an encoded e-mail … stating 'for [initials of secured], the number is 49.'”
The second method, according to the attorney general’s office is Coventry’s breaching of its fiduciary duty by always reserving a good percentage of the purchase price – with a commission of more than 50 percent in some cases.
“Such brokers are supposed to represent the interests of policy owners,” the attorney general's office said in a press release in October 2006, when it lodged its suit. “They are supposed to obtain the highest price possible for their clients' policies through competitive bidding.”
According to a recent press release by Coventry, they stated that they were not assessed any penalty or fine as regards to the settlement.
“Coventry has paid more than $2.8 billion to consumers for insurance policies they no longer need,” the company said in the press release. “Over the past 12 months, Coventry has paid policy owners five times more than they would have received had they surrendered their policies back to the insurance company.”
Coventry also stated in the press release that both parties had an agreement on a set of business practices, which led to the establishment of a model for the life settlement industry. This includes the need that ‘brokers’ in life settlement deals reveal to the state of New York the amount they get for compensation.
Alan Buerger, the Coventry CEO showed his appreciation for drawing “attention to these important issues in our developing industry” by the present New York Attorney General, Andrew Cuomo.
When the office of the attorney general was contacted, they never responded neither did they return the calls.
This particular case is the People v. Coventry First LLC et al., and the case number is 404620-2006, in New York’s Supreme Court.
WALL STREET JOURNAL: ELIOT SPITZER SUES COVENTRY FIRST IN PROBE OF 'LIFE SETTLEMENT' CASES
NEW YORK ATTORNEY GENERAL: SUIT REVEALS FRAUDULENT SCHEME IN LIFE SETTLEMENT INDUSTRY