Brighthouse Life Insurance Co. Settlement Over COI Rates
Brighthouse Life Insurance Co. has agreed to a $9.25 million settlement in a class action lawsuit regarding its universal life insurance policies.
The lawsuit, initiated in 2021, alleged that Brighthouse failed to lower the cost of insurance (COI) rates despite improved mortality rates and reduced operational expenses. The settlement pertains to current and former policyholders with specific codes and policies like ULX, ULXP, and TUL91, originally under Brighthouse Financial's umbrella post its spinoff from MetLife in 2017. Plaintiffs argued that the unchanged high COI rates forced policyholders to overpay to maintain their coverage.
Settlement and Implications
Although Brighthouse denies any wrongdoing, the company's decision to settle aims to provide resolution and avoid prolonged litigation. Under the terms, qualifying policyholders will receive cash payments based on their policy's face value. Those with policies valued up to $250,000 will share the net settlement fund proportionately, while policyholders with higher face values will receive larger shares. The final approval hearing is scheduled for January 2027, with settlement payments automatically distributed to class members unless they choose to opt out by December 2026.
Impact on Insurance Industry
This settlement underscores the critical importance of transparency and adherence to fair pricing practices in life insurance. It serves as a reminder to insurers about the need to periodically review and adjust COI rates in response to shifting mortality expectations and operational costs. This case may prompt regulators to scrutinize COI rate practices more closely, encouraging insurance carriers to reassess their policies to avoid similar legal challenges. Industry professionals must stay informed about such precedents to guide compliance and underwriting strategies effectively.
Key Details of Brighthouse Settlement
- Total Settlement: $9.25 million
- Affected Policies: ULX, ULXP, TUL91, among others
- Final Approval Hearing: January 26, 2027
- Opt-Out Deadline: December 2026
- Automatic Payments: No need for policyholders to file claims
This resolution demonstrates the ongoing evolution of the insurance industry landscape, highlighting the balance insurers must strive for between profitability and fair policyholder treatment. As the settlement unfolds, it offers valuable lessons for insurers, brokers, and underwriters on managing policyholder relations and regulatory compliance.