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Furthermore, both German and Swiss companies have been hampered by laws that state they must provide returns to policyholders that exceed a set minimum.
Last year it told policyholders that life insurers did not run a risk of failure unless their solvency margin, measuring their capital adequacy, fell below 200%.
State lawmakers are also pushing insurance companies to make clear to policyholders that they can sell a life insurance policy to pay for long-term care.
Mr. Hagerty said he was assuring policyholders that his company has the financial wherewithal to cover the claims, despite his expectation that total damages could run "into the many, many millions of dollars".
For its part, Equitable Life this week reassured former policyholders that it will pass on any windfalls to them, and that it is definitely not plotting to deny them their free shares.
The company also warned policyholders that, following discussions with the FSA over the implication of a new "realistic" accounting regime, it would no longer be able to include the benefits of being a mutual when calculating future policy values.
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An annual report is provided to the policyholder that shows the status of the policy, including the death benefit, the amount of insurance in force, the cash value and surrender value, and any transactions made within the policy during the previous year.
New Jersey imposes a 6percentt limit on profits and requires refunds to policyholders when that limit is exceeded, for example, and insurers complain that reporting requirements make even the smallest policy changes burdensome.
Jeannine W. Chanes, a lawyer who specializes in representing policyholders, said that many small businesses were unsure of what kind of insurance they had, and that many had no insurance at all.
But many policyholders assume that their word is the final word.
The good news for Standard Life policyholders is that only they will benefit from the giveaway.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com