Testimony before the US House Banking and
Financial Services Committee
Washington State Insurance Commissioner Deborah Senn
February 12, 1998
Report on the National Association of
Holocaust Insurance Issues Working Group
Chairman Leach, distinguished Members, I wish to thank you on behalf of the National Association of Insurance Commissioners and its Holocaust Insurance Issues Working Group and on behalf of the survivors of the Holocaust and their heirs. It is an honor to come before you today and report to you on the work, findings, and issues of the Holocaust Working Group.
I come before you today as the Chair of the NAIC Holocaust Working Group and as the elected Insurance Commissioner of Washington State. Before I report on the Working Group and the Holocaust issues, I would like to take a moment to familiarize you with the National Association of Insurance Commissioners and the role of its member Commissioners in regulating the insurance industry and in protecting the rights of insurance consumers.
State regulation and oversight of insurance:
Every U.S. state, the District of Columbia, and the territories of Guam, Puerto Rico, American Samoa, and the Virgin Islands are charged with oversight of insurance activities and consumer protection within their jurisdiction. Of the officers charged with the responsibility for this function, some are elected by the voters and the balance appointed by their governor.
Insurance impacts the lives of virtually every person. It is an intangible product -- a promise of security and assistance at some unknown point in the future for which one pays today. There is a long tradition of regulatory oversight at the state government level. In the McCarran-Ferguson Act, Congress recognized that tradition by acknowledging that the public would best be served by state, not federal, regulation of the business of insurance.
This tradition has led to the development of a highly skilled, technically proficient professional workforce in state agencies. State insurance departments collectively employ 9,648 employees and dedicate $753,656,059 to the regulation of insurance.
Our regulatory jurisdictions are founded on two primary tenets:
We directly regulate any insurance entities that are licensed or authorized to conduct business within our state boundaries.
We advocate and act on behalf of residents in our state in their dealings with any insurance entity, even when the insurer is not authorized in our state.
These points are essential to the Holocaust insurance issue in that the state commissioners have the historical background of advocating for claimants and the regulatory clout to prevail on their behalf. The regulators regularly go into insurance companies to examine their records and documents.
State insurance regulators created the National Association of Insurance Commissioners, or NAIC, in 1871 to address the need to coordinate regulation of multi-state insurers. The first major step in that process was the development of uniform financial reporting by insurance companies. Since then, new legislative concepts, new levels of expertise in data collection and delivery, and a commitment to even greater technological capability have moved the NAIC forward into its role as a multidimensional, regulatory support organization.
Through the NAIC, the Commissioners and members of their staff meet throughout the year to investigate emerging issues; publish white papers; develop "model" legislation for introduction in legislatures across the nation to address these issues; and provide educational opportunities for state regulators to improve their efforts in dealing with them. This process provides an appropriate degree of consistency of regulation, while emphasizing the strengths of direct oversight and regulatory action at the state level.
I share this background with you to give a context for the efforts of these state regulators on behalf of the survivors of the Holocaust and their heirs.
The Holocaust & Insurance Claims
The genesis of the NAIC Holocaust Insurance Issues Working Group:
Last spring, I read a small item in an insurance trade journal about how a group of Holocaust survivors were seeking recovery of unpaid insurance claims arising from the Nazi-era in Germany and other European nations. I approached the leadership of the NAIC and we began to explore what actions the NAIC and the individual commissioners might take on their behalf of Holocaust survivors.
The potential breadth and depth of this issue is staggering. National estimates are that there are over 150,000 Holocaust survivors currently living in the U.S. (A breakdown of known survivors by state is included in todays materials). It has been suggested that, both in terms of total dollars and impacted individuals, these unpaid insurance claims may eclipse the Swiss gold and banking issue.
To test whether there were potential claims, my office mailed a letter and a preliminary questionnaire to approximately 260 of a projected 500 Washington state Holocaust survivors. We requested they share any documentation or recollections regarding European insurance policies and unpaid claims from the era.
The results of this survey confirmed our original assumptions about the scope and depth of this issue. We now have reached more than 150 Washington state survivors or their heirs and almost a third have responded with clear and distinct memories of insurance coverage. Some even had the tattered remains of policies and correspondence with the European insurers.
For example, the following is from a questionnaire filled out by a man in our state capital, Olympia:
"My mom was liberated by the Allies in 45. She had to walk back almost all the way to Hungary...In April 1947, she went to the Budapest branch of the Triesti Generali Insurance Company to collect on her fathers life insurance policy. She knew he had always made his payments because she was told the Germans had taken all the companys funds and they couldnt make good on her claim. So, here was my mom, 19 years old, no family, hoping she could collect on her fathers life insurance policy, so she could begin anew. And, what did she get? Sorry, we cant help you...These insurance companies have profited from the Holocaust far too long. It is time for them to make good on these claims and bring about some healing with their apology."
At the NAIC 1997 fall meeting here in Washington, DC, we held what would become the first of several informational meetings to collect firsthand testimony from survivors and their heirs. The interest among the commissioners and their staffs was unprecedented.
The commissioners formed a Working Group to examine the issue. The Holocaust Insurance Issues Working Group has drawn membership from 25 states. Typically, an NAIC working group will be made up of 10-15 states. (You will find a complete listing of member states in the materials circulated to you today).
Even states with no identified survivors have joined in the effort, some with unexpected consequences. Such was the experience for Montana, which had no registered or known survivors. Montanas commissioner was subsequently contacted by a handful of local survivors with insurance claims after the local media covered his participation in the NAIC Working Group.
Informational meetings held across the country:
Since the formation of the Working Group, we have held informational hearings in suburban Chicago, Miami, Seattle, Los Angeles, and Philadelphia. On Monday, a session will be held in New York City.
At each of these meetings, we have heard dramatic and compelling testimony by survivors and heirs. We have heard of unpaid claims and lost policies from nearly all lines of insurance, from life insurance to property and casualty coverage for homes and businesses. We even heard about dowry insurance, an annuity-type product purchased on the birth of a daughter that matures at the age of majority.
Several examples of this testimony have been provided to you today. I will highlight just a few:
In Chicago a survivor testified: "My father was a lawyer in Vilna, Poland. I recall that in 1939, shortly after the war started when we were living on Michiewicza Street, Vilna was handed over to Lithuania by Russia. My father, standing at his desk, pointed to a red leather case with the shiny letter, Wita Kotwica, the name of a Polish insurance company with whom he had a life insurance policy that he could have cashed in that year. He said it would be better to collect on the policy in dollars than Polish zlotys because of the political situation. The Germans were already setting up a ghetto in Warsaw and my father knew they would come to Vilna, so instead of cashing in the policy, he left it with the company in Vilna. My father was killed in the Holocaust in 1942."
In Los Angeles, an heir reported: "As my father neared death in 1962, he tried to make arrangements for my mother. He did have a life insurance policy from Romania issued in 1931 by a German firm called Viktoria. From his home in Tel Aviv, he contacted this firm. They wrote back to him acknowledging that he had a policy but that their records of contracts were destroyed in the war. This was the reason they gave for refusing to honor this policy or even considering to make any kind of payment. After my fathers death, my mother lived in near poverty..."
A New York man who remembers insurance agents coming to his parents home in Belgium in 1942 with a special "two-payment" life insurance policy marketed to Jews as a "protection" for their children. Before the second payment could be made, the Jews had been deported to death camps.
A Florida man has tried unsuccessfully to obtain benefits from five policies owned by his father in Bulgaria, as well as 14 policies held by his grandfather. Although he has documentation for much of the claim, he has not received meaningful assistance from the companies.
At each of the hearings, we also took testimony and questioned representatives from several of the largest European insurance companies that have been identified in this matter. Representatives of Assicurazioni Generali, the Allianz Group, the Winterthur Group, and Zurich Insurance Company, among others have appeared or submitted written statements. To date, their responses have included positive statements regarding their concern over the resolution of the claims.
However, the specific questions the Working Group has presented to them regarding access to company records or specific resolution of claims are still pending. To the best of our knowledge, only three claims have been paid.
State insurance departments work in unison to resolve survivors claims:
As noted earlier, the state insurance departments have the technical and professional expertise to untangle even the toughest insurance puzzles. We understand the inner workings of the insurance industry and the market dynamics that underlie company decisions. We have legal teams that study and interpret the myriad of insurance laws.
We are experienced at poring over insurance company records to determine their practices and the claims performance. We know where and how to look for lost records and how to reconstruct lost policies. Our jurisdiction over the licensing of insurance companies gives us clout when working with the companies to resolve claims.
The NAIC and the Working Group provide us with a platform to maximize our efforts on behalf of the survivors through group action and coordination. The Working Group has begun research on the history and holdings of the identified insurers, especially their grants of authority to conduct business in American states. We also have clarified jurisdiction of the commissioners in the matter and opened a dialogue with European insurers towards resolution of the claims.
In addition, we have already examined some questions and reached some important decisions. One of the most important decisions of the Working Group has been to coordinate our individual activities and use the strength of collective action to maximize our effect in obtaining justice for the survivors.
This cooperative spirit will inform all of our dealings with the potential claimants and the insurers. For example, as individual states collect and document potential claims by American survivors and their heirs, we are developing a national database system to record and track them. This will eliminate duplicative efforts and establishes a mechanism to communicate efficiently with the survivors and the insurers.
We must not lose sight of our purpose of achieving a measure of justice for every survivor who suffered as result of unpaid, legitimate insurance claims. The collective clout of the commissioners strengthens the cases of individual survivors in states which may have fewer claimants. Thousands of claims from across the country will command more attention from the insurers than a handful from any one state. (However, even in a state like Washington which has relatively few survivors, we have already identified nearly fifty potential claimants).
Additionally, as in the Swiss banking issue, concerns have emerged that, given the scope and age of the cases, there exists a danger that individual records could be lost by the insurance companies. To safeguard against this possibility, the Working Group has determined that the claimants will be best served and protected by the submission of the claims as a group, rather than each state submitting each claim separately.
Questions and problems identified for action by the Working Group:
The complexity of documentation:
Some survivors managed to hold onto actual insurance policies by carrying them out of Europe, recovering them after the war, or reconstructing the lost coverage through research and communication with the companies. You will find in your packet a well-preserved example of such a policy. It is from the Bosnia region of the former Yugoslavia.
However, many of the survivors do not still have actual policy documents, but they do have evidence of their existence. Some have memories of specific coverage and the name of the insurer. Some have policy numbers or receipts of premium payments. Others have clear memories of conversations with loved ones about how to use insurance coverage to start over should they survive the Holocaust or remember the visits of insurance agents to their home or businesses. The commissioner can act based on these pieces of evidence.
Tragically, there were probably even more who perished and for whom no heirs survived.
However, the insurers may still be liable for these policies. And, the lack of complete evidence need not be a roadblock to recovery. There are many ways to reconstruct these coverage.
Risk International, from whom you will be hearing on this panel, has already uncovered indirect documentation that prove the existence of policies seized by the Gestapo. There is strong evidence that massive amounts of German insurance data is stored in the archives in the former Soviet Union (and, some believe, in American archives as well).
We have asked the identified insurers to voluntarily follow the lead of the Swiss banks in opening up their records from the period and providing a complete listing of their policyholders. With these records, there is the capacity to cross-reference the many resources identifying Holocaust victims. We are prepared to work with Risk International, Yad Vashem in Israel, the Material Claims Conference, the Holocaust Museum and other resources to make this possible.
As in the Swiss banking issue, we have every expectation that the numbers of records of policies will grow as pressure is applied from the insurance commissioners, Congress, Jewish recovery organizations, and the attorneys fighting for settlement of these claims.
This voluntary disclosure could save incredible expense and time in finally resolving this 50-year-old situation.
Legal and regulatory strategies:
We have every hope and expectation that the insurers will voluntarily open their records, but, if not, we are have many tools in our toolbox that the insurance commissioners may use to bring satisfaction to these unpaid claims. To varying degrees, the states have "unfair practices" and "good faith" statutes, holding company oversight, and examination authority. If our requests for cooperation are not satisfied, then the states may begin to exercise these powers.
The European insurers conduct business and have extensive holdings throughout the country. The parent companies, their holding companies, and their subsidiaries are all domiciled in various states. Following are just three examples of the extent of European insurers involvement in American markets:
Allianz is the one of the worlds largest insurer and has extensive holdings in the U.S, including the Firemans Fund, one of our best-known property and casualty companies. (I have provided in your materials today a complete listing of Allianzs holdings that are authorized in Washington State. This list indicates the others states that also authorize these holdings).
Winterthur is the parent of Unigard, another prominent property and casualty company, domiciled in Washington State.
Businessmans Assurance, domiciled in Missouri and authorized in many other states, is owned by Generali.
These are licensed entities over which we have substantial regulatory authority, including the conduct of examinations and investigations of their policy and financial records, and the granting and/or revocation of their licenses to conduct business in our states. In some cases, the European parent company is the licensee and is already subject to our authority.
For example, Assicurazioni Generali does business in Washington and several other states. We can subpoena their books and records or their executives. California has already done so. Together, states in the Working Group are prepared to take such legal actions, if it is deemed necessary.
We have prepared and delivered a series of questions to the companies to identify their past practices, their current willingness to cooperate with our efforts, and their position on making good on their potential claims. But, make no mistakes about it, there are insurance commissioners in this country prepared to use their full legal authority to make sure that these claims are paid--paid timely and paid in full.
Companies challenge federal jurisdiction:
Although we expect the insurers cooperation, we have seen in federal court in New York that the insurers intend to challenge survivors claims with a contention that the United States has no jurisdiction over their dealings. Whether one agrees that a class action suit is the best approach, American survivors are entitled to have their day in American courts. If the court accepts, the commissioners intend to support that right by filing a "friend of the court" brief in the case.
We disagree strenuously with the insurers position on the question of jurisdiction. Most, if not all the European companies do business in this country, either directly or through multiple branches and subsidiaries. They are already subject to the jurisdiction of the commissioners as licensed insurance entities. They must obey federal and state insurance laws and are subject to regulatory action.
Many efforts on parallel tracks:
As you will have been hearing today, there are a number of groups working towards a resolution of this issue, as well as those related to banking, gold, and art. Among others, we know of the efforts on behalf of survivor insurance claims by:
The NAIC Holocaust Insurance Issues Working Group
The Conference of Jewish Material Claims Against Germany
The Holocaust Museum
A class-action suit on behalf of survivors filed in federal courts in New York
The US State Department
The US Congress
Individual state legislatures
The Working Group believes that each of these efforts is needed to achieve some measure of relief for the survivors. Through these many divergent approaches, we will collectively help survivors and their heirs recover as much as possible.
There is a danger that the different groups may inadvertently cross into the path of another and derail their work. We must all keep focused on those we are seeking to help and how to best deliver results to them. Communication between the different entities is essential to attaining the goal of real justice in this matter. My commitment to you, as Chair of the NAIC Working Group on Holocaust Insurance Issues, is to maintain a positive flow of information as our work progresses.
Commissioners and Congress can work together:
Clearly, there are serious international issues involved in finding an equitable resolution to these unpaid claims. Just as the commissioners and the NAIC are well-equipped to tackle the research and regulatory actions needed on behalf of the survivors and their heirs, Congress and the federal government has considerable clout to move on the international issues.
Already you have passed Chairman Leach s bill to facilitate the archival research and translation services that could move all Holocaust claims closer to resolution. Senator DAmato and Special Envoy Stuart Eizenstat have played key roles in pressuring the Swiss government and banks to cooperate in the gold investigation.
We ask that you consider resolutions to pressure European insurers and governments to participate fully in the efforts to reconstruct the insurance coverage from the era and to determine the extent of unpaid claims, and disposition of the assets associated with the policies.
Generali has stated that they are not liable for claims in Eastern Europe because their holdings there were nationalized with the rise of communism. However, this is an area of intense disagreement.
There are treaties involving Eastern Bloc countries that returned nationalized assets to Generali. These treaties raise questions about these claims by Generali and other insurers in Eastern Europe.
Allianz has asserted that the German government stood in their shoes in the payment of Holocaust claims. Yet there are questions about whether these claims were ever fully paid. We know of Allianz policyholders who were never paid by the German government or Allianz.
There are also questions about the location of assets during these time periods.
After World War II, what efforts were made by European insurers to determine the number of dead policyholders and where assets attached to dead policyholders should be disbursed?
Did insurers search for surviving beneficiaries of their policies?
Do insurers have estimates of the value of the unpaid policies following the war?
Were insurance companies enriched by the non-payment of these claims?
The most positive impact would be for both Congress and the commissioners to demand the opening of period records for a thorough examination. The companies should provide a full accounting of all period policyholders for cross-referencing by regulators against Holocaust registries. There should also be a listing of all unpaid policies from the period to facilitate this research.
There is no provision for the disposition of the unpaid claims for the heirless victims of the Holocaust. If true justice is to be served, the insurers should be held fully accountable for their role. That may require some form of relief based on the millions of innocent victims who paid their premiums, but for whom no relatives survived to see the benefit of their responsible actions and investments.
Thank you again for the opportunity of bringing this issue before you today. Please join the National Association of Insurance Commissioners in pursuing justice for the victims of the Holocaust.
We must have the clear understanding that, at its heart, the Holocaust insurance issue is about fundamental justice. The unpaid claims of survivors, their heirs, and the heirless victims of the Holocaust represent hard-earned premiums paid to the surviving insurers. These premiums were literally stolen from them. The work before us is simply the pursuit of justice after so many years of neglect.
Our goal must be to maximize recovery for these victims. We must never lose the focus of that goal. Survivors are aging, many in ill-health. We must act quickly and decisively.