Insurer defends its refusal to payout on Madoff fraud policy
AIG has dismissed without merit a lawsuit by Robert and Harlene Horowitz seeking money lost to convicted Ponzi-scheme operator Bernard Madoff, Dow Jones reports
“Our Private Client Group has paid hundreds of eligible policyholders who suffered Madoff-related losses pursuant to this coverage," an AIG spokeswoman said. "However, in this case, we declined the plaintiffs' claim because they received more money from Madoff through withdrawals from their account than they had deposited."
Brad Friedman, a lawyer for the couple, said that their claim shouldn't be weighed on a "pure money in, money out" measure.
AIG paid “substantial premiums”
"As courts have held in similar situations, including a recent court of appeals decision, our clients did not give Madoff their money to hide under a rock or lock in a safe, but for the express purpose of investment with the reasonable expectation that the money would grow," Friedman said.
Friedman said the insurer collected "substantial premiums" to cover this type of fraud and "its refusal to pay the claim is unconscionable."
