Expert: Knights of Columbus inflates membership numbers

NICHOLAS RICCARDI

DENVER (AP) — The Knights of Columbus has inflated its membership by more than a quarter, which could imperil the Catholic fraternal group's life insurance business, according to testimony Wednesday in a federal lawsuit.

The Knights say they have 1.9 million members globally who belong to more than 10,000 local councils that maintain their own membership rolls and perform good works. Separately, the Knights' insurance company sells life insurance policies to those members and their families in the United States and Canada, covering 1.5 million people.

Wednesday's testimony in Denver federal court came during a lawsuit filed by a small company that had hoped to become the Knights' designated provider of web sites for those councils. The lawsuit alleges the Knights balked at the project partly because they did not want to streamline their record-keeping, which would lead to a reduction in the membership they could report.

Multiple Knights have complained in interviews that it is difficult to remove from the rolls members who no longer pay their dues. A former Knights insurance agent, John Hernandez, testified on Wednesday that the rolls are so out of date that some even include Knights who have since died.

A court-ordered survey of the Knights' councils showed that local councils reported 28% fewer members than the headquarters recorded. "No matter how you count it, there is a huge disparity," said Martin Shapiro, the data expert who analyzed the survey for the plaintiffs.

A second plaintiffs' witness, former Nebraska Department of Insurance director Ann Frohman, said that rating agencies would look askance at discrepancies between internal membership numbers and ones the organization publicizes, which could hurt the Knights' insurance business,

The Knights were dismissive of this, noting that even Frohman agreed their insurance arm is financially sound. Although it sells insurance to members, the Knights can market to any Catholic who joins the group within 90 days, creating a larger pool than its own membership numbers reflect.

Ratings agency A.M. Best did not comment on Wednesday. It said in a February report that one measure of growth for the Knights' business — premiums paid by Knight policyholders — was flat for 2017 and the first nine months of last year but that it deserved one of its highest ratings — A+ — nonetheless. It said the insurer has no debt, a record of generating profits, and plenty in reserves to pay out to policyholders.

The Knights say there is naturally "fluidity" in their membership numbers as local councils have their own practices for tracking and managing membership, though all must follow standards set by headquarters. The organization tries to err on the side of letting members remain on the rolls in the hopes of enticing back those thinking of leaving or cutting a break for those facing difficult times. A spokeswoman, Kathleen Blomquist, said the survey's wording confused many local councils and does "not accurately reflect our membership."

In interviews, Knights gave varying accounts of the difficulty of removing inactive members from their local councils' rolls. Greg McAtee of Mobile, Alabama, said his local council has 150 members, but has been unsuccessfully trying to remove about 40 for over a year. Despite receiving signed letters from some asking to leave the organization — including from one Knight who moved overseas — the group's headquarters keeps them on the rolls.

"The local councils end up being stuck with a bunch of deadbeats," said McAtee, noting that councils have to pay an assessment per member to headquarters in New Haven, Connecticut.

Charlie Crawford, who ran councils in the state of Georgia and was in charge of keeping rolls streamlined, said many councils struggle to follow the correct process, but that if procedures are followed, it can be done. "I don't agree it's not possible," he said.

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Bernard Condon in New York contributed to this report.