Prudential settlement languishes as lawyers fight on
The Multistate Task Force Report
Some state insurance commissioners chose not to participate in or endorse the Multistate Task Force Report. This group includes the commissioners in Florida, Texas, California, Arizona, Illinois, Kansas, Louisiana, Michigan, Nebraska, Oregon, and Washington. The leader of the Task Force was the commissioner for the State of New Jersey, which is Prudential's home state.
Florida's Insurance Commissioner, Bill Nelson, was outspoken against the Multistate Report, complaining that the report neither adequately punishes Prudential nor adequately remedies the wrongs done to the victims. The Florida Department of Insurance pursued its own investigation of churning practices at Prudential and reached its own settlement that guaranteed payments to Florida policyholders.
Even though the Multistate Task Force Report is seen by many as too lenient upon Prudential, the conclusions reached in the report include the following:
- Evidence exists that Prudential agents churned policyholders.
- Prudential systems for detecting improper replacement of policies did not work.
- There were widespread violations by Prudential agents of various state regulations regarding the replacement of life insurance. The violations were not isolated to any one region of the country.
- Deficiencies in the company's replacement-file maintenance is a significant concern that demands immediate action by the company on a nationwide basis.
Prudential has admitted that some of its policyholders were churned.