Balance Still Due on Holocaust
Tomorrow, a subcommittee of the Senate Foreign Relations Committee will hear arguments about the obligation of global insurance companies to their policyholders.
At stake is the fate of the Holocaust Insurance Accountability Act. It would require insurance companies, such as Allianz, Generali, AXA, and Swiss Life — underwriters of policies to European Jews before World War II — to publish the names of their policyholders from that era. It also would guarantee a right for holocaust survivors to bring lawsuits against these and other insurers, if they refuse to settle on fair and acceptable terms.
The House Foreign Affairs Committee, with unanimous consent, passed the act in October 2007. Now, the bill awaits passage in the House Financial Services Committee.
As the world recently has witnessed with Swiss bank accounts, stolen European artwork, German slave labor, and plundered gold bullion, the Holocaust, in addition to a genocidal rampage, also was a colossal financial crime. The number crunching of mass murder resulted in a paradoxical windfall for wartime profiteers.
European insurance companies were no exception. Since Jews were being targeted by the Nazis for death, they were customers for whom, when it came to the purchase of life insurance, a sales pitch was unnecessary.
Given the uncertainties of Nazi-occupied Europe, insurers commonly sold policies to Jews with the explicit contractual promise that they would be payable anywhere in the world.
What these Jews didn't realize when they sought to insure whatever future awaited them is that their insurers would eventually hand over their customer files and accounts to the Nazis.
After World War II, the insurance companies refused to pay on the overwhelming majority of policies, demanding death certificates and original policy documents, neither of which was available in the apocalyptic post-Auschwitz landscape.
In later years the same companies claimed that they lacked records of unpaid policies or that records could not be reconstructed with any degree of accuracy. Such assertions were untrue.
What is true is that hundreds of thousands of policies, worth $17 billion today, were despoiled by insurers that invested their ill-gotten gains wisely. This is what made these insurance companies become the world's largest ones. After betraying their customers and stealing their premiums, they told those who were alive still to get lost.
In 1998, under the guise of avoiding costly litigation, insurers and regulators agreed to create the International Commission on Holocaust Era Insurance Claims, or ICHEIC. The purpose was to pay claimants based on liberal standards of proof. Five years later, however, ICHEIC acknowledged spending more on administrative expenses, including first-class air travel, than in payments to those who had bought insurance. Claimants experienced multi-year waits followed by denials without any explanation despite evidence that insurance policies had, in fact, once existed.
After nine years, in March 2007, ICHEIC's mission was completed and the results were startling. Less than 3% of the value of insurance policies had been paid. Some of the funds were used for projects that did not even benefit survivors. A treasure trove of policies still remains unaccounted for.
Many claimants sought relief in state and federal courts. These courts, however, were no more hospitable. In a series of decisions granting insurers sweeping immunity, ICHEIC was deemed the exclusive forum for defrauded Holocaust victims and their heirs. Survivors were denied their day in court.
In the meantime, a federal judge approved a class action settlement against Generali, allowing it to pay minimal claims and to be released from all future claims without having to disclose its records.
This outcome is revolting. There are tens of thousands of survivors living in poverty worldwide, and many are the beneficiaries of these stolen policies.
Now it is left to Congress, which thus far has been silent about this tragic tale of unaccountable fraud and justice denied. Indeed, this legislation may be the last chance to correct a historic wrong and provide necessary legal and moral closure for Holocaust survivors. After all, they have been deprived of not only the proceeds of their policies, but also of the details of their family histories.
Given the renewed spirit of restitution and truth seeking that exists throughout the world, with continued gestures of contrition in Germany, it is anomalous that European insurers are being shielded from legal scrutiny by Holocaust survivors and that their interests are placed higher than those of the survivors.
It never hurts for corporations to be motivated by the self-auditing principles of goodwill. Take, for example, German companies that acknowledged and made restitution for the use of slave labor during the Holocaust. The bottom-line business of income statements normally does not account for the moral currency of doing the right thing.
But, given the global reconciliatory atmosphere in which we live, perhaps Congress will remind European insurers of the legal and moral duties they owe their customers, who still await the benefits of their premiums.
Mr. Rosenbaum, a law professor, is the author of "The Myth of Moral Justice." He will be testifying before the subcommittee of the Senate Foreign Relations Committee on Tuesday.
