PRUDENTIAL SETTLEMENT REACHED IN ILEditor's Note: This release comes from the Illinois Department of Insurance Web site.
PRUDENTIAL SETTLEMENT REACHED IN IL
July 9, 1996 -- SPRINGFIELD, IL -- Director of Insurance Mark Boozell announced today that Prudential Insurance Company of America will pay a $2.3 million civil forfeiture in Illinois--the state's share of the record $35 million nationwide fine imposed on the New Jersey based insurance company for marketing abuses. The fine is part of a stipulation and consent order Boozell issued on July 5, 1996, in response to the findings of the market conduct examination conducted by a Multi-state Task Force headed by the New Jersey Insurance Department. Illinois was a member of that Task Force and has officially adopted its report.
Boozell said Illinois originally initiated its own market conduct examination of Prudential's sales practices, but preliminary findings so closely mirrored those of the Task Force that he opted to join the Multi-state group rather than duplicate its efforts and issue a separate report. "We concluded that policyholder interests would be better served utilizing the combined resources of the 30 participating states," he said.
State insurance regulators have charged the company with widespread sales violations ranging from agent misrepresentation to illegal replacement of coverage. The report also faults company management for its failure to responsibly police and discipline its agents.
"Although the Prudential fine is the highest ever assessed, both in Illinois and nationally, the focus of our settlement agreement is restitution to policyholders," Boozell said. "During the course of our own investigation and through our participation in the Task Force, our goal has always been to protect the interests of the estimated 749,000 Illinois citizens who may have been financially harmed by Prudential's sales practices. The remediation program outlined in the Task Force report and adopted in our order ensures that all policyholders will be treated fairly," he said.
Prudential clients who purchased the approximately 10.7 million permanent life insurance policies sold between January 1, 1982, and December 31, 1995, will receive an explanation of the remediation program directly from the company. Those who choose to participate will be instructed on how to submit their sales-related claims for review and will have multiple opportunities throughout the process to appeal the findings. Options ultimately available to consumers who have been harmed will include full premium refunds, continued coverage with no additional premiums due, partial premium refunds, and the opportunity to obtain additional life insurance or annuities enhanced by the amount that would normally be allocated to agent commissions.
"Illinois intends to be closely involved in the remediation review process," Boozell stated. "At least two of our own market conduct experts will participate on the state regulator oversight panel. Further, under our settlement agreement, we reserve the right to perform a target review of the remediation program if it is determined that the program is not performing satisfactorily."Boozell said Illinois policyholders should receive notification from Prudential within the next 60 to 90 days. Consumer inquiries should be directed to the company at 800-736-8913.