A lawyer for dozens of burned insurance policyholders lashed out at state regulators yesterday after his clients’ payouts were cut by up to 66 percent.
Eddie Stone, who represents 40 people insured by the liquidated Executive Life Insurance of New York, said state officials should have been better prepared for the $2.4 billion liquidation.
More than 20 years after its California parent became insolvent, ELNY was liquidated yesterday and its liabilities overwhelmed the state’s $558 million insurance fund.
While 8,500 policyholders got paid in full, roughly 1,500 did not. It was the first time the state insurance fund did not cover 100 percent of a failed company’s liabilities.
“For these [policyholders], the cuts are real and very painful,” said Stone.
“[My clients] are going to have to make major adjustments in their lifestyles,” he added.
Indeed, Manhattanite Eric Rabinowitz, one of the policyholders burned by ELNY, told The Post that he may have to apply for food stamps because he’s expecting to be whacked by cuts to his annuity payments.
Rabinowitz was left blind in one eye after a 1983 botched operation and won a subsequent malpractice lawsuit.
“I don’t know if he’ll qualify, but he’s going to apply,” Stone said.
ELNY’s liquidation has wiped out a $558 million insurance fund and a separate $105 million hardship fund set to help provide some relief to policyholders.
“We worked hard for policyholders to maximize value in a very difficult situation,” said a spokesman for the state insurance regulator.
The former New York State Department of Insurance was consolidated in 2011 into what is now the Department of Financial Services, run by Superintendent Ben Lawsky.
Stone points the finger at the New York Bureau of Liquidation, now under Lawsky’s oversight, for dragging its heels on helping insured victims of the firm’s tortuous collapse and favoring guaranty companies over victims.
The lawyer alleges that the NYBL has scooped up as much as $82 million in assets from ELNY from 1997 to 2011, based on his estimates.