A Missouri federal judge cleared the consolidation of three class-action lawsuits tied to Kansas City Life Insurance Co.’s $45 mn settlement over claims it improperly inflated cost-of-insurance (COI) charges, according to BestWire.
The lawsuits allege the company deducted amounts beyond what the policies allowed, pulling extra funds from accumulated value accounts meant only to cover authorized charges.
Policy terms stated COI rates would be based on mortality expectations such as age, gender, and individual risk. Plaintiffs said Kansas City Life factored in undisclosed elements like profit goals and expense assumptions to set higher charges.
According to the preliminary settlement, $5 mn of the $4 5mn deal will cover claims in a separate case overseen by another judge.
Two additional lawsuits tied to similar allegations are being handled independently, with some class members already receiving notices or payments.
Kansas City Life isn’t alone in facing litigation over COI practices, but analysts note its smaller earnings base and modest balance sheet amplify the potential hit.
In October 2024, AM Best shifted the insurer’s outlook to stable from negative, while warning it would keep monitoring how these settlements affect financial strength.
For policyholders, the consolidation could accelerate payouts, but for the carrier, it locks in a costly resolution that still leaves other suits lingering.
