Holocaust Insurance Claims Panel Faces Recriminations over Delays

Many European countries observed Sunday, Jan. 27 as Holocaust Memorial Day, a time set aside to honor the memory of the 12 million human beings—over six million of them Jewish—who perished at the hands of the Nazis during World War II. Ironically, during the week before the event, a host of recriminations surfaced among members of the International Commission on Holocaust Era Insurance Claims (ICHEIC).

At one point former Secretary of State Lawrence Eagleburger stormed out of a meeting with European insurers and abruptly resigned his position as ICHEIC Chairman in frustration over the body’s apparent inability to begin making serious progress on the some 79,000 claims which have been presented. Reports also indicated that he was fed up with criticism of his work and accusations of bias from the insurance companies involved, and frustrated that he lacked the authority to impose solutions in the negotiations, which he characterized as the most difficult of his career.

Although he was persuaded to return to his post 24 hours later, backed with promises of new authority to settle disputes and a general endorsement of his efforts from committee members, the storm surrounding the ICHEIC has not lessened. A report in the New York Times highlighted the fact that the panel has been instrumental in settling a relatively meager $15 million in Holocaust insurance claims, while reportedly spending some $40 million on its own administrative costs.

In all fairness to the ICHEIC, the insurers and Eagleburger, have been given a monumental task. It was inevitable from the start that such a highly politicized issue as Holocaust claims would be attended by controversy. A commission was first talked about in 1996, roughly 50 years after the end of the War, as a means of collecting, verifying and eventually assuring payment to Holocaust victims and their families on thousands of unpaid insurance policies taken out between 1920 and 1945.

It received the endorsement of the U.S. Government and the National Association of Insurance Commissioners in 1998, and was established by France’s AXA, Germany’s Allianz, Switzerland’s Zurich and Winterthur and Italy’s Generali. Six members represent the insurers, and six represent potential claimants with an independent chairman.

The panel is a deliberative body with a staff to investigate, review and decide the merits of claims presented to it. Part of its mandate is to encourage “anyone who believes he or she has a valid life, education, or dowry policy” in effect between 1920 and 1945—which may not have been paid—to present a claim. The ICHEIC then assumes the responsibility of investigating and processing an eventual payment for its members. In cases where the insurer may not be a member, it turns the claim over to the company with a request that it be processed in the same way as ICHEIC members’ claims.

Other European insurers, such as the Netherlands ING and Aegon, have since joined, but indirectly through adhesion to their National Insurance Associations. Two of Germany’s largest insurers, Munich Re and Gerling Global, have so far declined to become full members. Although they have pledged some $250 million and said they would join the panel, they’ve refused to allow their records to be inspected and to publish lists of policyholders. Munich Re has always maintained that, as a reinsurer, it has no liability on primary policies and cannot force its subsidiary, Victoria, to publish any lists.

Allianz wrote polices during the era in question, but many of the others are successors in interest to companies they acquired or merged with after the war, which adds to the difficulty of locating records. Many other companies, including ING and Aegon, have reached settlements outside of the ICHEIC’s procedures.

A panel, established 50 years after the events it is supposed to investigate, faces some unique problems. Many agencies and commissions have already addressed some of the same concerns. The conference on Jewish Material Claims Against Germany has been working in cooperation with the State of Israel since 1951 to recover lost property and assist Jewish victims of the Nazi regime.

The amount of compensation specified in a policy written in 1932 bears no relation to its value in today’s money. Eagleburger’s formula—that the amounts be calculated at 10 times their face value, roughly equivalent to the rise in the price of gold, but far less than current monetary equivalents—was attacked by claimants’ representatives as offering far too little.

The ICHEIC also faces huge difficulties in verifying claims. Few original policies survived the war. Most of the original signatories, if they didn’t perish before 1945, have since died or are in their 90s. The deaths of an overwhelming majority were never officially listed; their remains were either cremated or thrown into anonymous mass graves. In addition many of the towns, villages and cities they came from were destroyed by the war, along with any records.

As normal documents don’t exist, the ICHEIC’s procedures have sought to minimize their absence by allowing diary entries, premium receipts, private correspondence, and statements from friends and relatives in lieu of more formal proof. But this still leaves many questions unanswered and creates more delays.

Even though the insurers have repeatedly proclaimed their good faith, only 1,000 claims, out of 79,000 presented, have been offered a settlement. Worse, only 275, less than .01 percent, have been accepted. The meager total is far below the original projections. By comparison, negotiations over other wartime claims with a number of European governments, banks and companies to compensate Holocaust victims and their families for lost property, slave labor service and similar claims have moved ahead almost rapidly.

Despite some progress, negotiations over insurance policies have moved at a snail’s pace. In November 2000 Generali agreed to establish a separate fund of $100 million (since raised to $150 million) for Holocaust-related claims. But the others, while paying some claims, have rejected many more. They’ve accused the ICHEIC and Jewish groups of making unreasonable demands and trying to establish a costly semipermanent claims bureau, and cite EU privacy rules that prohibit them from publishing lists of their policyholders. The delays and the disputes have led to a good deal of rancor and countercharges that the insurers are making impossible demands and intentionally delaying payments.

The companies maintain they are keeping their promises and point to the difficulties involved. Allianz board member Herbert Hansmeyer stated that prior resolutions and treaties, notably the Federal German Restitution Law and the German-Israeli Reparations Treaty of 1952, had assured repayment to “everyone who was a victim of Nazi persecution…including the holders of insurance policies.” He indicated that for many years there’d been virtually no activity. Now Allianz has received a number of inquiries about old policies, but that “almost all inquiries we receive do not result in claims, as the vast majority of insurance policies in question have already been paid.”

Hansmeyer attributed the upsurge to the collapse of the Communist hold on Eastern European countries. Their citizens can now make claims in the West that had been largely ignored by the dictatorships installed after World War II. While this may be a relevant factor for claimants in Europe, it doesn’t explain the delays experienced by victims and relatives in the U.S. He also cited the fact that as of 1969, in cooperation with the Jewish Claims Conference, 4.2 million settlements had been achieved.

More delays arise from the legal ramifications inherent in the ICHEIC mandate to settle claims. Insurers, like Allianz and the others, agreed to join the process on the condition that numerous legal proceedings and regulatory actions by State Insurance Commissioners in the U.S. be stayed, and that the ICHEIC be considered the forum for investigating and settling claims, rather than the courts.

Hansmeyer indicated that, while “legal peace” (i.e. the end of civil litigation) had finally been achieved, reaching that goal had been held up for almost a year “due to obstacles in the U.S. legal system.” The view reflects broad concerns in Europe about civil liability procedures in the U.S.

Many Europeans consider U.S. liability law as justice run amuck. It permits lawyers to be paid on a contingent fee basis, gives broad scope to class actions, orders huge compensation awards, often including punitive damages, and provides for endless appeals. European legal systems don’t operate at all the same way, even in the U.K., which is the birthplace of most U.S. legal doctrine. They are worried that juries in places they’ve never heard of could start ordering millions of dollars in reparations to Holocaust victims and their families. The ICHEIC was established in part to prevent this from happening, but many companies remain unconvinced that all 50 states and the federal government will adhere to its decisions.

In turn the delays aggravate the situation. Last September the National Association of Insurance Commissioners adopted a resolution expressing its “dissatisfaction with the positions taken by the German Foundation in negotiations regarding payment of Holocaust-era insurance claims.” It urged its members to “re-evaluate the formal or informal ‘safe harbor’ provisions given to affected insurers” and take other actions.

The situation isn’t helped by articles about the rapacious nature of U.S. trial lawyers either. One case, which was the subject of an ABC News 20/20 report in conjunction with the New York Times spotlighted attorney Ed Fagan. According to the report he traveled the world signing up Holocaust claimants, eventually numbering over 80,000 and had a prominent voice in seeking settlement of their claims.

ABC’s report, however, alleged that he neglected his clients, and when negotiating a settlement in Berlin, reportedly held up the proceedings until he was able to significantly increase attorney’s fees. Whether the allegations about Fagan are true or not is unclear, but when such stories surface, as they frequently do in relation to Holocaust claims, they further fuel European skepticism about the U.S. legal system.

Eagleburger’s return after his abrupt departure may mark a turn in the ICHEIC’s fortunes. One of his first actions was to push back the date for claims to be presented from the end of January to Sept. 30. The L.A. Times however, recently reported that his aide Dale Franklin had indicated that he was “very frustrated with things,” and realized that one agreement wouldn’t alone change the whole situation. Only one thing is clear—the ICHEIC will never be able to carry out its mandate without more cooperation from both claimants and insurers.

Topics USA Carriers Claims Europe Allianz Germany