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April 8, 2003

 Holocaust Survivors' Insurance Ordeal 

By JOSEPH B. TREASTER 

When Jack Weiss got out of the concentration camp at Muldorf at the end of World War II, he returned to Vrable, Czechoslovakia, to find his family home in ruins. Exhausted and weak, he moved into an abandoned house with other refugees.

Scraping by on relief agency handouts, Mr. Weiss, his sister and three brothers, who had also survived concentration camps, remembered that their father, who was killed at Auschwitz, had taken out a life insurance policy from a big Italian company, Assicurazioni Generali. In the late summer of 1945, they contacted the insurance company. But when they could not produce a death certificate or policy, they were turned away.

Jack Wiess

Jack Weiss, a Holocaust survivor, tells of his family's attempt to collect a life insurance policy on his father, who was killed in Auschwitz.


"Of course you couldn't get a death certificate from Auschwitz," said Mr. Weiss, who is now 75 and living in Toronto and Los
Angeles. "And how could we have the policy? They took everything from us when they took us away. The company gave us the runaround, and after a while we just gave up."

Now, nearly 60 years later, Mr. Weiss, a retired watchmaker, is again trying to have Generali pay the old claim. He and seven other Holocaust survivors have filed a suit against Generali for the value of their policies, which their lawyer, William M. Shernoff, estimates may now be worth hundreds of thousands of dollars each, perhaps even millions of dollars, with punitive damages included.

Kaufman

Mr. Weiss, who uses his mother's maiden name, holds a 1940's photo of his father, Samuel Kaufman.

The new lawsuits, which were filed late yesterday in Superior Court in Los Angeles, represent an escalation in a long-running story that, some insurance experts say, could eventually involve tens of thousands of plaintiffs and billions of dollars in payments, far exceeding the $1.25 billion settlement with the Swiss banks in 1998 on behalf of Holocaust survivors.

Generali, one of the world's largest insurance companies, is at the center of the argument over Holocaust-era insurance. Founded by Jewish merchants in 1831 in Trieste, it had a thriving business in Jewish communities in Europe before the Holocaust. Insurance policies and annuities were often referred to as a poor man's Swiss bank account. Tens of thousands of people turned to these investments, trusting in companies like Generali to pay claims if trouble broke out in their home countries.

Beginning in 1997, more than 20 European insurers were sued for failing to pay claims on these policies. But most of the suits have been settled or dismissed; the German insurers were exempted as a result of a $5.1 billion settlement on Holocaust issues by the United States and Germany in 2000. That left Generali as the main defendant.

What allowed the new lawsuits against Generali to go forward &emdash; along with a dozen existing ones, including three that are seeking class-action status &emdash; was a recent decision by Federal District Judge Michael B. Mukasey in Manhattan. Generali and another insurer, Zurich Life Insurance, a unit of Zurich Financial Services that is named in one of the lawsuits, tried to persuade Judge Mukasey to dismiss the lawsuits and force the plaintiffs to try to resolve their claims through an international commission that was set up to guarantee payments.

But the judge said the commission, financed by the insurance companies and without judicial oversight, could not be relied upon for fair treatment. "In a sense," he wrote, "the commission is the company store."

The real driving force for the plantiffs is a deep, burning fury at what they say is the persistent dodging and stalling of the insurance companies, particularly Generali, and the woeful performance of the international commission, formally known as the International Commission for Holocaust-Era Insurance Claims.

For its part, Generali says that legally it owes nothing to its old policyholders and their heirs but that it has made efforts for what it calls humanitarian reasons to find policyholders and to offer compensation. It has paid claims over the last several years through the commission, which was set up with the participation of three large Jewish organizations, including the World Jewish Congress, and sanctioned by the United States government. The idea was that, by adopting a nonadversarial process, the commission would be able to get compensation to claimants quicker than courts.

Lawrence Eagleburger, chairman of the commission and a former secretary of state, initially declined to comment. But in a statement yesterday, he defended the commission, saying that it had "instituted a number of creative solutions that benefit claimants." He praised Generali and said it had paid claims through the commission when "it would not have been required to do so under normal insurance practices."

Generali contributed $100 million of the commission's $400 million -- by far the biggest contribution by a single insurance company -- and, like the five other insurers that joined, was promised that regulators would drop threats to suspend the licenses of the insurers' subsidiaries in the United States and try to discourage potentially embarrassing lawsuits.

But the commission has been criticized by survivors and insurance experts as favoring the insurers, processing claims slowly and offering paltry payments. Since its inception, the commission has offered payments on about 2,900 claims for a total of $36.9 million. But the commission's expenses as of 17 months ago had already climbed to $40 million. The offers average about $12,500 each. Some have been as low as $500, but Generali has paid some claims for several hundred thousand dollars each, including one for nearly $600,000. Altogether, Generali said it had paid about $35 million, mainly through the commission, to 2,200 claimants.

Barbara Senn, a former insurance commissioner for Washington State, had high hopes for the commission. But in a recent interview she said it had been "a huge disappointment."

Generali has maintained that it is not liable for these policies, in part because many were confiscated by the Nazis, who then demanded payment. Later, governments took over the company's offices in many countries. While the policyholders may not have received the money, "the insurance company paid somebody," said Kenneth Bialkin, a partner at Skadden, Arps, Slate, Meagher & Flom, who is leading Generali's legal team.

Generali said on Friday and Sunday that its operations in Czechoslovakia were taken over in May 1945, before Mr. Weiss says his family was rebuffed for lack of documents.

But Tomas Jelinek, who served as an economic adviser to Vaclav Havel when he was president of the Czech Republic, said in a telephone interview that the nationalization of insurance companies in his country began after a presidential degree was issued on Oct. 24, 1945. Guidelines for procedures were not published until October 1946. In a hearing on Holocaust insurance in Miami on May 19, 1999, Ricardo Nicolini, a senior Generali executive, said the takeover of Generali's offices took place on Nov. 20, 1946.

Generali maintained in a statement that it was never company policy to demand death certificates and policies from Holocaust victims and that it was unaware of any Generali customers who were treated that way. In 1999, however, Generali paid a reported $1.25 million to settle a lawsuit by Adolf Stern, a retired owner of necktie stores in New York. Shortly after getting out of Buchenwald in May 1945, Mr. Stern said, he made his way to the Generali offices in Prague, hoping to collect on a policy on his father, who died in Auschwitz. But he said Generali demanded to see a death certificate and a copy of the policy.

Reminded of the Stern case, a Generali executive in New York said Mr. Stern had since backed away from that statement. Reached in Miami on Sunday, Mr. Stern said he stood by his account.

Mr. Weiss has received an offer through the commission of about $2,000, or five times the original value of his father's policy. "They're offering me something ridiculous," he said. "For all these years, they were trying to avoid paying. Now, I'd rather have nothing than that they should write me off with $2,000."

Jack Brauns, a retired surgeon in Southern California, said he was offered $5,000 for a $2,000 policy that he first tried to collect on in Rome in 1945 after getting out of the concentration camp at Dachau. He sued Generali nearly three years ago.

One of the other new plaintiffs, Suzanne Weiner-Zada, an artists' representative in Los Angeles, is trying to get payment for a handful of policies, including one on her 10-year-old brother, Laszlo, killed in Auschwitz. Like Mr. Weiss, Mrs. Weiner-Zada says that Generali insisted upon proof of coverage. Last July, through the commission, Mrs. Weiner-Zada received a settlement offer of $10,533, which was raised over the weekend to $16,012. She became furious, she said, when she was asked to acknowledge in writing that Generali was acting out of charity and not in fullfilment of any obligation.

"It's like they're offering this money out of the goodness of their heart, that I should be grateful to them," she said. "But I'm not grateful to them. My father paid for this policy, and I should be able to enjoy the benefits. That I have to be grateful to them is such a cry for injustice that the sky should fall."

As the case moves forward, lawyers for both sides have been taking videotaped depositions of the plaintiffs, all of whom are elderly and may not live to see a trial.

Though billions of dollars are at stake, Generali's finances are strong. Its earnings lately, like those of other European insurers, have suffered because of the slump in the markets. In 2002 it reported a loss of 754.5 million euros (about $777 million) on revenue of 46.9 billion euros. But it reported capital and reserves of 8.6 billion euros.

In a business that relies heavily on public trust, insurance experts say the potential damage to Generali's reputation from having survivors testify in court that for decades it ignored or denied their claims, is far more worrisome than the immediate costs of any settlement.

"They don't want to be tarred with the historical responsibility" of not having paid claims they should have paid, said Daniel Kadden, a former aid to the insurance commissioner of Washington and a consultant to Holocaust survivor organizations.

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