Pundit Newswire: Ohio National Life Assurance Corporation v. Douglas Davis, Paul Morady, Mavash Morady, et al. (N.D. Ill.).
In two separate opinions, the district court in the Northern District of Illinois declared void ab initio five insurance policies procured by STOLI (stranger originated life insurance) investors on the lives of strangers. The STOLI investors procured five STOLI policies from Ohio National with aggregate death benefits totaling $2.8 Million, without an insurable interest in the elderly insureds’ lives. Illinois insurable interest laws are designed to protect the integrity of human life. When a life insurance policy is taken out for legitimate purposes, the person who procures the policy has an interest in the insured’s longevity. STOLI investors, however, have a sinister financial stake in the insureds’ early death. STOLI investors procure life insurance policies wagering that the insureds will die sooner rather than later, minimizing premium costs and increasing their profits. STOLI policies do not protect against any risk of loss; they are pure wagers on human life.
Striking a blow against STOLI investment practices, the district court entered summary judgment for Ohio National, declaring the policies void ab initio, and entering summary judgment against the STOLI procurers for civil conspiracy, and against the insurance broker for breach of contract, fraud, and civil conspiracy. As a matter of law, the court awarded damages to Ohio National in excess of $860,000.00 including attorneys’ fees, commissions paid to the insurance broker, and retention of premiums paid by the STOLI co-conspirators.