The issue of “shadow insurance” has been the subject of increasing regulatory and governmental scrutiny. Policyholders are now joining the effort via five class action lawsuits against three different insurance companies, MetLife, AXA Equitable and Lincoln National, for their use of shadow insurance.
Shadow insurance usually refers to an insurance company’s attempt to re-allocate reserve and collateral funds. The New York State Department of Financial Services describes shadow insurance as follows:
In a typical shadow insurance transaction, an insurance company creates a “captive” insurance subsidiary, …
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