“Stoli” is a nick-name for Stolichnaya, a famed Russian vodka. In PHL Variable Ins. Co. v. US Bank and in Minn. Stat. § 60.078, et seq., STOLI means “stranger originated life insurance” (Was the acronym SOLI already taken? Perhaps the originators of the STOLI acronym enjoyed the alcoholic connotations?)
Earlier this month, PHL Variable Ins. Co., represented by Terry Fruth and Texas lawyers, Edison, McDowell & Hetherington, filed suit against US Bank based on an alleged STOLI. Plaintiff seeks a declaratory judgment, which is specifically envisioned under the Minnesota statute.
The Minnesota statute also condemns STOLI’s as “wagers on life.”
Such practices, related legislation, and litigation are outside the experience of Minnesota Litigator (to date) but lead one to wonder why selling life insurance would be a profitable business when the beneficiary has an interest in the on-going life of the insured but not where the beneficiary is a stranger. There is certainly no suggestion of any ill will, animus, or any homicidal tendencies among the stranger investors. In other words, the fact of a stranger beneficiary presumably does not accelerate or increase the likelihood of the “insured event” (death of the policy holder). Perhaps the insurance industry’s problem with STOLIs is that the stranger investors presumably apply a more calculating and sophisticated analysis to the insurance product, making it less profitable (or not profitable at all?) for insurers?