White-Collar Crime - Fraud By Insurance Companies

In addition to the criminal attempts to swindle insurance companies, insurance companies sometimes defraud their customers. On April 30, 2001, a final settlement was reached in the class action brought against Principal Mutual Life Insurance Company by some 960,000 current and former life insurance policy holders who alleged that they were misled by false and misleading marketing materials when they purchased their policies.

In January of 2002 a preliminary settlement of $59 million was announced in a class action lawsuit brought by automobile policyholders in Georgia against Allstate Insurance Company. Policyholders alleged that Allstate failed to provide payment for the loss of an automobile's market value after an accident when paying for the repair costs of automobiles involved in accidents. Also in January 2002 a final settlement of almost $5.6 million was approved in the class action suit brought by parties in 27 states against United Services Automobile Association (USAA). As in the Allstate action, automobile policyholders alleged that USAA failed to compensate them for the loss of value of vehicles after an accident.