Banner Life and William Penn Policyholders: A $40.5 Million Class Settlement Over Premium Spikes
Geoff McDonald and co-counsel represented roughly 7,600 universal life policyholders hit with steep cost-of-insurance increases by Banner Life and William Penn, securing a $22.5 million cash fund inside a settlement the court valued at more than $40 million.
What happened
In 2015, Banner Life Insurance Company and its New York affiliate, William Penn Life Insurance Company, raised the cost-of-insurance charges on a group of universal life policies. People who had bought the coverage years earlier opened their statements and found the monthly cost climbing fast. In one example cited in the case, a policyholder's monthly payment jumped from $285 to $1,860.
The increases reached roughly 7,631 policyholders. Universal life is often bought by older people who count on stable charges to keep their coverage in force, so a sudden spike can force a hard choice: pay much more, or let a policy lapse after years of paid premiums.
Geoff McDonald & Associates of Richmond, Virginia, with attorney Frank H. Hupfl III, joined co-counsel to bring the policyholders' claims in federal court. The fight ran across two suits. Dickman v. Banner Life was filed in January 2016, and Rich v. William Penn followed in July 2017, and the court consolidated them for settlement. The complaints alleged breach of contract and fraud. The core argument was that the insurers had no legitimate basis under the policy terms for the cost-of-insurance increases, and that the charges were driven instead by a captive reinsurance arrangement that moved money inside the corporate family. As McDonald put it, "There are strict and complex rules for premium increases."
After about four years of litigation and discovery in the U.S. District Court for the District of Maryland, Judge Richard D. Bennett granted preliminary approval in October 2019 and final approval on May 20, 2020. Banner and William Penn funded a $22.5 million cash common fund. The court valued the full settlement, counting its non-monetary terms, at $40,749,525, a figure Virginia Lawyers Weekly reported as roughly $40.5 million. Plaintiffs' counsel were awarded about $7.85 million in fees plus expenses out of that recovery. As part of the deal, the insurers agreed not to impose similar cost-of-insurance increases for five years.
One class member, a family trust, objected and appealed. In March 2022 the Fourth Circuit affirmed, holding that the district court did not abuse its discretion in approving the agreement. The settlement was finalized that June with no reduction in its value.
Sources
This account is drawn from contemporaneous public reporting and the court record.
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