After a Jackson County jury awarded some $28.4 million against a Kansas City-based insurer, the court is considering a request by class members for nearly $13.5 in prejudgment interest.
Kansas City Life Insurance was sued in the Jackson County Circuit Court for allegedly including hidden expenses in its cost of insurance rates rather than using only its mortality expectations. The plaintiffs discovered the discrepancy with the assistance of counsel and an actuarial expert, according to their attorney Ethan Lange of Stueve Siegel Hanson law firm.
Kansas City Life Insurance denies any wrongdoing.
"The insurance company drafts insurance policies on a take it or leave it basis, therefore, insurance companies should understand that they have an obligation to write clear, unambiguous policies that they must comply with," Lange said. "Consumers rely on the insurance company to properly calculate the cost of insurance charges."
The class action lawsuit applies to policyholders across the state of Missouri who owned one of 23 policies that were active on or after January 1, 2002.
A common practice among other insurers is to disclose the various factors used to determine the cost of insurance rates, as opposed to disclosing certain factors and not disclosing the remaining factors used to determine the cost of insurance rates.
“Each policyholder’s cash value was reduced by Defendant’s overcharges,” Lange told the St. Louis Record. “Depending primarily on the size of the policy and length of time the policy was held, Defendant overcharged policyholders in various amounts. Moreover, cash values had fewer funds due to the overcharges to earn interest.”
The undisclosed additional expenses are the equivalent of about $3,500 per policyholder or a total of $28.4 million. However, a judgment has not yet been entered and Kansas City Life Insurance can still appeal.
“Each policyholder would receive a pro-rata share of the judgment, reduced by attorney fees and expenses determined by the Court,” Lange said. “The policyholder’s pro rata share is determined by the number of that policyholder’s overcharges.”
Judge John Torrence certified the class, made up of 8,028 policyholders, in July 2021, and the policies were sold over three decades, according to media reports.
Under Missouri law, the Court determines the award of attorney’s fees but the Court has yet to make a determination, according to Lange.
"Additionally, Defendant has not paid the judgment," he said. "Until the judgment is final, including after any appeals, no funds can be distributed to policyholders."