A former Hartford life-insurance business has agreed to an $11 million settlement over premium-tax charges it allegedly miscalculated, and eligible policyholders would not have to lift a finger to collect. Talcott Resolution Life and Annuity Insurance Company and an affiliate reached the deal to resolve claims that they overcharged certain life insurance policies by applying the wrong state premium-tax rate. If a federal judge grants final approval next month, checks would be mailed automatically to the people who were overcharged, with no claim form to complete and no deadline to meet.
What the premium-tax overcharge was
Premium tax is a state levy that insurers pass through to policyholders, and the size of that charge depends on where the policyholder lives. The lawsuit alleges that the insurer failed to keep those charges accurate. According to the settlement administrator, the case, Arbuckle Funding LLC v. Talcott Resolution Life & Annuity Insurance Company, centers on universal life and variable universal life policies whose premium-tax rate was supposed to track the policyholder’s state of residence but allegedly did not.
The complaint describes several ways the charge went wrong. In some cases the insurer allegedly failed to lower the rate after a policyholder moved to a state with a cheaper premium tax. In others it allegedly did not update rates when a state changed its tax law, or it applied a higher rate tied to Connecticut’s schedule to policyholders living in states with lower statutory rates. New York policyholders were allegedly charged more than the applicable state rate. Each of those patterns, the plaintiffs argue, produced an overcharge that accumulated quietly inside the policy.
The defendants deny wrongdoing beyond certain limited administrative errors they acknowledged and corrected, and the court has not ruled on the merits. Rather than litigate, the parties agreed to settle and to make forward-looking fixes, including no longer applying the Connecticut rate to lower-rate states and capping the New York premium-tax charge at 0.7 percent unless the law changes. Those changes matter as much as the checks, because they stop the alleged overcharge from recurring on policies that stay in force.
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Checks that arrive without a claim
The most consumer-friendly feature of the deal is that it asks nothing of the people it pays. The settlement’s frequently asked questions state that class members who do not opt out will automatically receive a check in the mail from JND Legal Administration if they are entitled to one, with no claim to file. That structure is common when an insurer already knows exactly who was overcharged and by how much, because the records that produced the error also identify the victims.
How much each policyholder receives depends on the type of alleged overcharge. Class members with address-change and rate-update claims are slated to receive the full amount of those overcharges, less a proportional share of fees and costs, because the insurer effectively acknowledged those errors. Policyholders with disputed retaliatory-tax-rate claims are set to receive a lower percentage, reflecting that those allegations were contested rather than conceded.
The money is drawn from an $11 million settlement fund covering the class, with administrative costs and fee awards deducted before checks go out. Because the payments are keyed to specific policies and specific charges, there is no flat per-person figure, and a policyholder’s share reflects the actual overcharge on their own contract rather than an even split of the fund.
Whether a given policyholder is covered turns on specifics the settlement spells out. Eligibility reaches owners of universal or variable universal life policies whose premium-tax charge was supposed to track their state of residence, and the disputed tax-rate claims apply to a defined list of states that includes New York, Connecticut, Illinois, and Ohio, among others. A policyholder who moved to a state with a lower premium tax after buying coverage, and whose rate was never adjusted, is among the clearest candidates for the address-change portion of the settlement.
Why it is still ‘would’ and not ‘will’
No checks are moving yet, which is the reason this remains a proposal rather than a payout. The court has scheduled a final-approval hearing for September 24, and the settlement’s terms, including the automatic payments, take effect only if the judge approves the deal at or after that hearing. Until then, the $11 million fund and its distribution plan are agreed to by the parties but not yet ordered by the court.
Policyholders who want to stay in the settlement do not need to act, but those who want to object or remove themselves face an earlier cutoff. The administrator’s schedule of key dates sets the deadline to opt out or object at August 26, well ahead of the approval hearing. Opting out preserves the right to sue separately but forfeits the automatic check, a trade that only makes sense for a policyholder who believes their overcharge was far larger than the settlement would pay.
For everyone else, the practical stance is to do nothing and keep an eye on the calendar. The settlement’s value to an individual policyholder is modest and precise rather than a windfall, but it is unusual in requiring no effort at all, provided the court signs off next month and the address on file still reaches the person the check is meant for.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
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