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Dutch Insurer Raising Red Flags on U.S. Soil

Logos of Aegon and Transamerica life insurance, pensions, and asset management company

Aegon is a life insurance, pensions, and asset management company based in The Hague, Netherlands, and more commonly known as TransAmerica here in the States. They seem to be an innovative company, using different management structures and providing multiple ways for employees to make money. It is an established company that has been around for quite some time, however through the years some of the company’s actions have been put under a lot of scrutinies, and for good reason.  Despite all the media attention and legal actions, higher-ups have done nothing to change protocols, and have merely swept these controversies under the rug.

    While Aegon doesn’t talk much about how World Financial actually makes money, it’s clear that it is very different from other companies in its industry. The structure is based on multilevel management or a pyramid-type model. This means that agents are making money not just from selling a product, but they also make commissions from agents they have under them or bring into the company. In fact, most of the money comes from commissions. The more people you manage, the more likely you’ll be promoted, and the more commissions you’ll make. You start off as a training associate. After three recruits, three sales, and thirty days, you can upgrade to an Associate. Without a license, you can’t sell insurance, so your marketing director will sell for you and the commission will count towards you. The next step up is Marketing Director, followed by Senior Marketing Director, Executive Marketing Director, and CEO Marketing Director. Each has a separate list of requirements before you can be promoted, and each has a different set of benefits, each one more exciting than the one before. Most people today would call this a pyramid scheme and would steer clear, yet somehow Aegon makes it work for them. They have a steady base of employees that do their business. Those that can’t keep up with the demand are out.

    It doesn’t take much to become an employee of Aegon, World Financial Group, or TransAmerica. All you have to do is go to an orientation, pay the $100 start-up fee, become a Training Associate, and start working. They require you to have a U.S. social security number and a clean criminal record, but no insurance background. That should send up some red flags. The training sessions they host are pretty vague and are more motivational speeches than anything actually technical. They also don’t provide employees with a salary. This isn’t a huge issue, since people are making money off of commissions, and they are probably making more from commissions than they ever would with a salary.

    Unlike other multilevel marketing groups, Aegon invests in people’s life savings, instead of selling make-up, health drinks, or other material products. This can be a slippery slope, one with which World Financial is very familiar. Most complaints are from customers who claim to have lost money because agents misinformed them and they put their money into inappropriate investments. Back in 2007, when all of these complaints started becoming more public, spokesman of World Financial’s former owner S. Hubert Humphrey Jr., said in response, “Compared with fines and claims at Wall Street first, those at World Market were low. ”  Even then, World Financial’s wrongdoings were being shrugged off because, apparently, there were bigger problems.
    There has been a lot of controversies when it comes to World Financial’s sale techniques. There have been multiple cases brought against Aegon and the World Financial Group for making empty promises, misrepresentation, and selling unsuitable securities.  In 2008, CEO Alexander Wynaendts was quoted on Bloomberg TV saying, “When we took the company over, we put in place very strict regulatory and compliance procedures. Of course, when you have such large numbers of people out there in the field, it is quite an effort. ”  He claimed to have things under control; however, the issues continued.

    In May 2014, it was decided that TransAmerica and MetLife would jointly pay the state of Minnesota $4 million to settle claims that they weren’t paying beneficiaries of unclaimed life insurance policies. TransAmerica is set to pay $2.5 million of the total sum. In April of 2014, TransAmerica paid $1.1 million in Florida because the St. Petersburg firm overcharged clients when they failed to inform them of a new policy, even after regulators specifically pointed out the problem to the firm. In June of 2013, it was involved in a $763 million settlement with 11 other insurance companies who were charged with withholding funds that should have gone to beneficiaries. And that’s just within the last year and a half. Over the years, TransAmerica, World Financial, and Aegon have been involved in numerous lawsuits and legal problems and have not made any changes to policies to fix these issues.

    All of this media attention Aegon and its subsidiaries have been getting seems to be bringing to light issues with other companies in the insurance industry. AIG paid $35 million to settle a case brought against them for selling insurance without proper licensing. Just this month, Sun Life Companies, based in Canada with subsidiaries in the U.S., was charged with not doing enough to find beneficiaries of life insurance policies who had not filed claims after claimants had passed away. How are people supposed to trust life insurance companies when they are not holding up their end of the bargain?

Despite all these lawsuits and accusations, Aegon has over 24,000 employees and operates in more than 25 countries across the world. They sell mostly life insurance, but also provide individual savings and retirement services, pensions, and asset management to name a few services. Because of their pyramid system, most employees are found on a recruitment basis and because of their benefits and easy commissions, most employees stay.

Aegon and its subsidiaries are a pyramid scheme playing with people’s life savings. They claim to be selling valuable products, yet time and time again they have been found misrepresenting investment returns and making unsuitable annuity sales. Instead of accepting their mistakes and trying to better their business tactics, they simply pay countless dollars to cover their mistakes and keep continue on as if nothing happened. Employees are able to easily climb the ranks and make a six-figure salary through commissions and by selling insurance, even though they don’t necessarily have an insurance license. Their media attention has brought to light issues with other insurance companies as well, making it well known that insurance companies across the country need to get their act together. Aegon may seem to be a legitimate life insurance provider with clients who have no problems with their policies and happy employees making a more than adequate living; however, their history holds too many of the same legal problems for it to be worth the risk.

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