A pending class action lawsuit against Shelter Life Insurance Co. could affect 45,000 current and former policy owners.
The lawsuit is the result of a disputed cost increase on life insurance policies.
The lawsuit filed in the Western District Court of Missouri alleges that Shelter raised cost-of-insurance rates of life insurance policies bought on or before Dec. 31, 1991, and owned through Jan. 1, 1992.
The lawsuit is applicable to policy amounts between $25,000 and $249,000.
Joe Moseley, vice president of public affairs for Shelter, said the lawsuit will have no long-term effect on Shelter’s finances.
“We already have set aside an amount that would cover the settlement if everyone eligible filed a claim,” he said.
The lawsuit claims that Shelter increased its cost-of-insurance rates, breaching policy terms, in an effort to make the policies more profitable. The policy terms stated that cost-of-insurance rates could only be increased if there were a change in “mortality” factors such as sex, age and rate class.
The lawsuit also alleges that Shelter covered up the increase and failed to disclose the change to policy owners, who were left believing that they were paying more against their policy.
Shelter made more than $10 million in profits as a result of the disputed increase, according to the lawsuit.
The lawsuit was filed on the behalf of the policy members by Craig Massey of Bristow, Okla., who is represented by three law firms.
As a result of an agreement last month, Shelter agreed to run a notice about the lawsuit but still disputes the allegations.
“We have disputed the allegations of the plaintiff and have agreed to put this to rest,” Moseley said.
One of the attorneys involved, Robert A. Horn of Kansas City, declined to comment on the lawsuit until the deadline to file claims had passed. The deadline is Aug. 9.
Those who believe they might be eligible for a claim should contact Horn or Joseph Kronawitter, another attorney with his firm, at 866-808-3514.