ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, July 8, 1996 TAG: 9607080039
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
DATELINE: NEWARK, N.J.
SOURCE: Associated Press
THE NATION'S LARGEST insurance company will pay more than $20 million in restitution to policyholders.
Prudential Insurance Co. of America has agreed to pay more than $20 million and create a multimillion-dollar restitution plan to help settle complaints it misled policyholders, officials said Friday.
The fine was proposed by a task force of state insurance regulators investigating sales practices at the nation's largest life insurer. The group is scheduled to issue a report on its findings next week.
Citing unidentified sources, The Wall Street Journal said Friday that the report will contend sales abuses were more widespread than Prudential has acknowledged and that the company could have done more to stop them.
Executives previously have acknowledged only instances of wrongdoing by individual agents and managers, saying such instances violated the policy of the Newark-based company.
A spokesman for the New York Insurance Department refused to confirm that number or disclose specifics of the restitution plan, but said the fine would be more than the record $20 million paid by Metropolitan Life Insurance Co. two years ago.
The focus of the probe has been a practice called ``churning,'' in which agents persuade customers to use the built-up cash vale of older policies to finance new, more expensive ones.
Regulators and lawyers for individuals suing Prudential contend agents took advantage of customers who were ill-informed or deceived about the cost of the transaction and the extent to which it harms the older policy.
LENGTH: Short : 40 linesby CNB