Commissioner Fines Jackson National Life for Churning

Washington State Insurance Commissioner Deborah Senn says she has fined the Jackson National Life Insurance Co. $67,000 for improper sales practices that ranged from so-called "churning" to the use of unlicensed and unappointed agents. "This is a clear message to the industry," Commissioner Senn says. "Improper replacement of life insurance policies, also known as 'churning,' can mean a dramatic drop in the cash value of a policyholder's holdings, and we're not going to tolerate misbehavior."

The $67,000 fine, which has been paid, goes directly into the state's general fund, which is used to pay for priority state programs, such as education, at the designation of the state legislature. Senn says Jackson, which is headquartered in Lansing, MI, also signed a consent order that stipulated to the violations that led to the fine as well as corrective action.

Senn says the penalty followed a market conduct investigation and aggressive negotiations by the Enforcement Division of her office.

"We intend to shut down these repeated procedural violations," Senn says. "Washington state residents fully expect the life insurance agency to follow the same rules and laws that other insurance companies obey." Senn says the Jackson case also should serve warning to insurers that she intends to continue the kind of market-conduct examinations that preceded the fines.

Violations against Jackson included:

• Half of the 42 replacement policies selected at random for review contained procedural errors.
• Three of the agents whose background was reviewed were unlicensed; another six had sold insurance products prior to their appointment.
• Jackson's advertising failed to identify specific individual policies by form number or other appropriate description.

The consent order notes that Jackson has taken steps to remedy problems uncovered during the investigation and that the company has improved training and oversight of its agents.