2015-Book-The Insurance Forum-Chapter 5-The A.L. Williams Replacement Empire, by Joseph Belth-15p

  • 2015 - Book - The Insurance Forum - Chapter 5 - The A.L. Williams Replacement Empire, by Joseph Belth  ---    [BonkNote]  ---  15p
  • 1 - Often ALW sold an annuity rider attached to the tern life policy to provide for the accumulation of savings.
  • 1-2 - Although life insurance companies and agents who act in a professional manner usually try to avoid replacement activity, for reasons discussed in chapter 4, most of ALW's business involved replacement of existing cash-value life insurance policies. ALW's sales organization was of the multi-level marketing type-some critics called it a pyramid-with mostly part-time representatives at the lower levels of the organization and mostly full-time representatives at the higher levels.
  • 2 - ALW's Activities
    • At least seven characteristics of ALW's activities infuriated other life insurance companies and agents.
      • replacements
      • Third, ALW recruited huge numbers of part-time representatives and required each recruit to buy a policy on the recruit's own life. Thus there was a blurring of the distinction between the recruitment of representatives and the sale of life insurance.
        • ALW trained its representatives to denigrate the full-time representatives of other life insurance companies
      • Sixth, ALW sought to suppress negative material. A vivid example of this practice - ALW's 1981 attack on the Forum and me described later in this chapter.
      • Seventh, ALW criticized other life insurance companies harshly:
        • For example, at sales meetings it displayed large banners reading "Wet on Met" and "Pee on Pru." Williams himself described other companies' agents as 'low life" and scum."
  • 55 - The conclusion of my April 1981 article became important in subsequent developments. Here is the full section:
    • ....an inordinate emphasis on the alleged opportunity for sales representatives to get rich quick. The organization displays some of the characteristics of a chain letter, and like a chain letter will sooner or later run out of prospective recruits and prospective customers. Until the operation runs its course, however, we fear that many people are going to be seriously hurt. Among those to be hurt 
      are  ...  persons who enter the organization with high hopes that are dashed.
    • 55-56 - it is our opinion that the ALW organization is engaged primarily in the churning of life insurance.
    • The ALW Attack on the Forum and Me
      • On October 28 I received a copy of the Raxter letter from a Pennsylvania agent of Prudential Insurance Company of America. That was my first knowledge of the letter. It was also my first knowledge that ALW was using the letter as the centerpiece of a national campaign to discredit the Forum and me, and to intimidate agents who were trying to protect their policyholders against ALW's replacement activities.
      • On November 4 I wrote to Raxter requesting several items. He responded on November 16. He sent me a copy of the den Boer letter. It said that ALW disagrees strongly with the last paragraph of my article, and that unauthorized distribution of the article by agents in their conservation efforts is an unfair trade practice under North Carolina laws and regulations.
      • Raxter finally sent me the circular letter. It said in part that "statutes and regulations of this State ... specifically prohibit the sale or conservation of life insurance on the basis of the negative aspects of competing products and companies." I found that statement totally at odds with his cited sections of the law.
      • In response to my request for a list of the "allegations" and "opinions" the Department considers "inaccurate" or that "tend to create an inaccurate impression in the mind of the customer," he said "there exists no Departmental record of that nature," and he referred me to the den Boer letter. 
      • 59 - Our Lawsuit against Ingram
        • On December 31 Vladeck filed a lawsuit on my behalf against Ingram in the U.S. District Court in Raleigh. We asked the court to do three things: (1) declare that Ingram had acted in violation of the U.S. Constitution in suppressing distribution of the Forum article, (2) order Ingram to rescind the Raxter letter, and (3) preliminarily and permanently enjoin Ingram from threatening or taking disciplinary action against insurance companies or insurance agents based upon distribution to consumers of materials discussing negative aspects of competing products and companies so long as the materials are not untrue, deceptive, or misleading.
        • On April 6, 1983, the court granted our motion for summary judgment. The court ordered Ingram not to suppress distribution of the April 1981 article unless and until it was determined to be subject to suppression under applicable North Carolina laws and regulations. The court decreed that, in the event the article was determined to be subject to suppression, we be afforded at least 20 days' notice and an opportunity to be heard before measures were taken to suppress distribution. The court retained jurisdiction to resolve our claim for attorney fees.
          Ingram appealed the decision to the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia. On February 27, 1984, at oral argument on the appeal, a three-judge panel unanimously affirmed the district court decision from the bench without requesting oral argument from Vladeck.
        • On May 8, 1984, the district court awarded us $20,500 in attorney fees and $1,500 in expenses. On June 14, 1984, checks in those amounts were drawn against the Department's account, and the legal battle ended.
      • 60 - Ingram's Kangaroo Hearing
      • 64 - Other Articles about ALW
        • Following the excitement generated by my first article about ALW, I received from readers a large and steady stream of information about the activities of ALW. As a result, during the period from April 1981 to November 1990, I wrote 50 articles about ALW in 39 issues of the Forum. A few of the articles are discussed briefly here.
      • The Saturday Evening Post Incident
      • 65 - The U.S. Congress Incident
      • 66 - The Southern Illinois University Incident
      • 67 - Alan Press
        • He felt the activities of ALW were a serious threat not only to life insurance consumers but also life insurance companies.