MustangWorks.com : Ford Forums - View Single Post - Corporate Owned Life Insurance

Mr 5 0 · 05-04-2002, 07:32 PM

Unit:

Yes, Unit, I'm familiar with the COLI case in Texas and as a former insurance company empolyee myself (inside sales rep for The Hartford) I can agree with your analysis of the situation.

I don't have a problem with the way COLI is used as a funding vehicle for executive retirement contracts and, as you point out, taxes are eventually paid, anyway.

Using COLI to insure hourly-wage employees, with no real insurable interest and no consent, as Wal-Mart once did, was risky, even if they did base the trust in no-consent, COLI-friendly Georgia.

I agree that Texas is grossly exceeding it's jurisdiction in this case and the tort lawyers are simply looking for a payday. I think they'll fail, as Wal-Mart has a seriously strong legal staff and plenty of cash to buy more, if necessary. The Georgia base for the trust should protect them, but you never know.

Still, Wal-Mart took some chances with using COLI to insure non-exempt employees. They'll probably survive this challenge but it's a reminder that the legal sharks are always out there, swimming around, looking for those deep pockets.

Most people hate big business (but love jobs - go figure) and almost no one really understands how insurance works, even in it's basic form ('spread the risk'), much less the more arcane elements of the insurance business, like COLI.

I appreciate your vent but I suspect we're very likely to find ourselves pretty much alone in our interest in this issue so don't be surprised if you don't see many more replies.

Nothing personal, just that business and insurance issues bore most folks to death. Then again, sports don't do a whole lot for me, so it all balances out.

05-04-2002, 07:32 PM	#3
Mr 5 0 Conservative Individualist Join Date: May 1997 Location: Wherever I need to be Posts: 7,487	COLI complications Unit: Yes, Unit, I'm familiar with the COLI case in Texas and as a former insurance company empolyee myself (inside sales rep for The Hartford) I can agree with your analysis of the situation. I don't have a problem with the way COLI is used as a funding vehicle for executive retirement contracts and, as you point out, taxes are eventually paid, anyway. Using COLI to insure hourly-wage employees, with no real insurable interest and no consent, as Wal-Mart once did, was risky, even if they did base the trust in no-consent, COLI-friendly Georgia. I agree that Texas is grossly exceeding it's jurisdiction in this case and the tort lawyers are simply looking for a payday. I think they'll fail, as Wal-Mart has a seriously strong legal staff and plenty of cash to buy more, if necessary. The Georgia base for the trust should protect them, but you never know. Still, Wal-Mart took some chances with using COLI to insure non-exempt employees. They'll probably survive this challenge but it's a reminder that the legal sharks are always out there, swimming around, looking for those deep pockets. Most people hate big business (but love jobs - go figure) and almost no one really understands how insurance works, even in it's basic form ('spread the risk'), much less the more arcane elements of the insurance business, like COLI. I appreciate your vent but I suspect we're very likely to find ourselves pretty much alone in our interest in this issue so don't be surprised if you don't see many more replies. Nothing personal, just that business and insurance issues bore most folks to death. Then again, sports don't do a whole lot for me, so it all balances out.