Life Insurer May Increase ‘Cost of Insurance’ Rates to Recoup Losses, 10th Cir. Affirms

DENVER — A life insurer did not breach certain policies by raising “cost of insurance” (COI) rates to recover losses after some of its reinsurance contracts were canceled, the 10th Circuit U.S. Court of Appeals has affirmed, explaining that the policies allowed the company to raise the rates to recoup past losses.

In a Nov. 13 opinion, a panel majority noted that the appellants did not challenge the lower court’s interpretation of the policies’ nonparticipation provision to mean that the company has “substantial discretion” to set COI rates as long as it considers certain mortality factors.

PHT Holding I LLC …