Bobby Samuelson Was Right: “Cue the Premium Financing Lawsuits”

Supreme Court of the State of New York County of Rockland

June 6, 2023

Ester Aronson and Baruch Aronson, Plaintiffs v. Brave Strategies, LLC, Defendant

Plaintiffs Ester and Baruch Aronson allege that Defendant Brave Strategies, LLC made material misrepresentations and omissions in connection with the acquisition of high-value life insurance policies and associated premium financing arrangements. As a result of these misrepresentations, Plaintiffs claim they suffered damages exceeding $1 million, including but not limited to compensatory and punitive damages, and attorney fees. Specifically, Plaintiffs contend Defendant provided false information regarding the amount of out-of-pocket costs associated with the annual payments for premium financing. Concerning the policies, Plaintiffs allege it was represented to them that out-of-pocket costs would be minimal on the premium financing annual payments, as the Defendant represented that the annual dividends generated by the policies would at least cover or surpass the interest payments due on the accompanying loan. This was not the case, the Aronsons allege, as interest rates consistently increased throughout the initial years of the policies, forcing the Aronsons to provide additional collateral for the loan, far beyond what was represented to them by the Defendant.

This case illustrates the risks, at times significant, associated with premium financing strategies for life insurance. As Bobby Samuelson predicted, suits like these were almost bound to be a by-product of a rising interest rate climate. It may be interesting here to watch the impact of the fairly recently enacted New York suitability statute on these claims.