Jump to Navigation

Shadow Insurance

Life insurers are required by various states’ laws to hold funds in reserve to ensure that the insurer will be able to pay the policies’ beneficiaries should an unexpected event occur.  However, insurers have increasingly begun using secretive transactions—what one regulator called “shadow insurance”—to skirt these regulations and make themselves appear to be in better financial positions than they actually are.

The states regulate insurance, which translates to a patchwork quilt; some states’ regulations are far more comprehensive than others, including rules on how insurers can invest their reserves.  Many insurers in states with tighter regulations have been circumventing their state’s oversight, however, by setting up and conducting deals through shell companies in a state with looser regulations.  The insurer thus escapes the scrutiny of their home state’s regulators, which can lead to placing reserves in riskier investments, artificially increasing its risk-based capital ratios (a measure of solvency), or even increasing its executive compensation or stockholder dividends.  In the words of one New York regulator: “Those practices were used to water down capital buffers, as well as temporarily boost quarterly profits and stock prices.”  These practices expose insurers and their customers to much more risk, and may be accompanied by the specter or another financial collapse.

Evans Law Firm, Inc. advocates for whistleblowers and consumers.  If you believe you have witnessed fraud, including fraud committed by insurance providers, contact Evans Law Firm, Inc. at (415) 441-8669 or info@evanslaw.com for a free and confidential consultation.

Free Evaluation Form
  • Bold labels are required.
  • The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.
  • This field is for validation purposes and should be left unchanged.
Mailing Addresses

San Francisco/Bay Area
3053 Fillmore Street #236
San Francisco,CA 94123

Phone: 415-441-8669
Toll Free: 888-50EVANS
Fax: 888-891-4906
San Francisco Law Office Map
google plus

Southern California / Los Angeles / San Diego Office
6701 Center Drive West
14th Floor

Los Angeles, CA 90045

Phone: 415-441-8669
Toll Free: 888-50EVANS
Fax: 888-891-4906
Map and Directions
google plus

Play Audio Interview SuperLawyers - Ingrid M. Evans
Avvo - Rate your Lawyer. Get Free Legal Advice.
facebook linkedin twitter