Revoking of Insurance Firms’ Licenses Urged

Several large European insurance companies should be stripped of their licenses to do business in California because they have failed to honor claims from Holocaust survivors or their heirs, the chief lawyer for the California Department of Insurance said Tuesday.

William W. Palmer, the agency’s general counsel, said the department has the power under state law to revoke a firm’s license for various reasons, after a formal hearing before an administrative law judge, although the sanction is rarely imposed.

After a hearing on the issue Tuesday at the Simon Wiesenthal Center in West Los Angeles, Palmer said he would recommend the action. Both he and state Insurance Commissioner Chuck Quackenbush said they were very disturbed that only one of 10 insurance companies they asked to voluntarily participate in the hearing chose to appear.

“They’ll be subpoenaed, and they’ll find the atmosphere very chilly here,” Quackenbush said of the others. “We have to find a way to get these claims paid.”

He said 18,000 to 20,000 California residents--Holocaust survivors as well as children of some of the millions who perished in the World War II genocide--have unpaid claims.

Rabbi Abraham Cooper, associate dean of the Wiesenthal Center, said he was pleased at the prospect of such strong action. Revoking licenses “will get their attention,” he said. “This is an issue of justice and restitution, not charity.”

Quackenbush, as a member of a National Assn. of Insurance Commissioners task force, has been participating in hearings across the country investigating allegations that Holocaust victims and their heirs have, for more than 50 years, been denied benefits on policies that were purchased in good faith. The commissioner and his aides have taken an increasingly tough public stance on the issue, which could involve millions of dollars.

In December, the state filed to join a national class action lawsuit based on the same allegations in New York federal court against 16 European insurance companies. The firms have moved to have the case dismissed on a variety of grounds. Some of the companies contend that they do not do business in the United States.

But Washington state Insurance Commissioner Deborah Senn, who heads the task force, said the companies are doing business in this country, either directly or through affiliates.

U.S. officials of the nine firms--based in Germany, Italy, France and other European countries--that did not send representatives to Tuesday’s hearing were not available for comment afterward.

An attorney for one of the companies, Assicurazioni Generali, headquartered in Trieste, Italy, sent a letter saying officials did not want to make public comments because of the New York case.

Senn and Quackenbush praised Allianz AG--a large insurance firm based in Munich, Germany--for sending a representative to the hearing. But both indicated that they were skeptical about several key points made by the official, Christopher Worthley.

He said Allianz’s senior management was “openly and honestly confronting the company’s history” and wants to settle unpaid life insurance claims without delay.

Worthley stressed that Allianz had set up a free help line--(800) 411-0118--for potential claimants. So far, he said, the line’s staff has received inquiries from 800 people with search requests for about 1,900 possible policies. However, he said that “in over 1,600 of the requests, no connection could be established to any Allianz AG subsidiary. . . . Of the 200 or so remaining claims, 31 were found to have been previously paid out directly to policyholders or beneficiaries.” Worthley said 59 inquiries involved policies that were settled by the West German government, which assumed legal responsibility--as part of the country’s postwar restitution program--for life insurance policies confiscated in Nazi Germany.

The remaining calls are still being researched, he said. So far, adequate documentation has been found in seven of the cases--five from Israel and two from the United States--with an average value of $3,000 to $6,000, he said. Worthley emphasized that those amounts stemmed in part from the fact that German currency was devalued tenfold after World War II.

Quackenbush retorted that those individuals paid by the German government after the war generally received a fraction of their policies’ value, while Allianz paid full value to the Nazi government on the policies it seized from its victims.

Moreover, Senn said, the company’s position “doesn’t pass the nose test. There were 6 million Holocaust victims. I was told that Allianz had 3,800 Jewish insurance agents in the 1930s. Where are all of those policies?”

Worthley responded that Arthur Andersen, the U.S.-based auditing firm, was going through Allianz’s records and expects to have a full report out in March.

Particularly striking testimony was offered by Alan Stern, a Los Angeles businessman, who contended that his family had policies worth $1.5 million that had not been paid off by Generali. He said his grandfather, Moshe “Mor” Stern of Uzshghorod, Hungary, paid Generali “a fortune in premiums . . . for life insurance to protect” his wife and seven children in the event of his death. The elder Stern, his wife and three of their sons perished in the Auschwitz concentration camp.

Since that time, Alan Stern said, various family members have tried to collect on the policies without success. For example, in 1946, his uncle Adolf Stern was told that “Generali could not process an insurance claim without a death certificate from Hitler and the Third Reich,” he said.

In 1972, he said, Generali told Mor Stern’s only surviving daughter that it could not trace any policy for her father. But in the winter of 1996-1997, the family, through an act of almost pure luck, obtained a copy of the policy that had been found at a Generali warehouse in Trieste--just a few months after the company had issued a press release denying the family’s claim, he said. Stern displayed the policy at the hearing.

However, after the “smoking gun” was discovered, Stern said, the firm issued a press release saying all claims under the old policies are outdated “and Generali does not regard itself legally obligated.”

Stern’s wife, Lisa, a Los Angeles attorney, recommended that state Department of Insurance officials send a team of auditors to catalog and analyze thousands of Generali policies at the Trieste warehouse; that Generali and its subsidiaries be barred from doing business in California until it pays legitimate claims; and that the firm be prosecuted for disseminating misleading advertisements.

A Generali attorney did not return telephone calls for comment. The firm, founded by Jews in 1831 and now a defendant in the New York lawsuit, is the largest insurer in Israel. In June it announced that it would establish a $12-million philanthropic fund to be administered by an independent committee in Israel in honor of Generali policyholders who perished in the Holocaust.