ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, September 25, 1996 TAG: 9609250057
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
DATELINE: NEWARK, N.J.
SOURCE: Associated Press
Prudential Insurance Co. of America said Tuesday it has agreed to pay at least $410 million to settle lawsuits claiming the company defrauded customers through misleading sales practices.
The settlement, which is subject to a federal judge's approval, could grow to more than $1 billion and stems from an agreement in July with a task force of state insurance regulators.
Policyholders' attorney Melvyn Weiss said policyholders will be advised of their rights and ``it's up to them to step up to the plate to take advantage of it or not.''
The settlement covers 10.7 million holders of policies between 1982 and 1995. The nation's largest life insurer is trying to put behind it complaints that it ``churned'' customers' life policies. In this case, agents persuaded customers to use the built-up cash value of older policies to finance more expensive ones. The practice had been the focus of a yearlong multistate probe and a series of lawsuits.
Officials claim agents took advantage of thousands of customers, including many older Americans, who were ill-informed or deceived about the cost of the transaction and the extent to which it harms the older policy.
The size of the payout will depend on how many policyholders file claims.
Prudential apologized to policyholders in July and agreed to pay a record $35 million in fines.
LENGTH: Short : 37 linesby CNB