ARIZONA DEPARTMENT OF INSURANCE
2910 North 44th Street, Suite 210, Phoenix, Arizona 85018-7256 · (602) 912-8456 · FAX: (602) 912-8452
|Executive Assistant Director|
|FOR IMMEDIATE RELEASE|
|November 5, 1996|
PRUDENTIAL LIFE CUSTOMERS TO RECEIVE INFORMATION
ABOUT THEIR RIGHTS AND REMEDIES UNDER SETTLEMENTS
Arizona residents, who purchased nearly 75,000 life insurance policies from The Prudential Insurance Company of America, are scheduled to be notified individually by mail this week about the details of a nationwide restitution program to address past improper sales, said John King, Director of Insurance.
Millions of Prudential policyholders around the nation who purchased more than 10.7 million permanent whole life policies between January 1, 1982 and December 31, 1995 will have an opportunity to submit sales-related complaints for review through a program that will begin by February 1.
This mailing of more than 10.7 million informational packets by Prudential is the result of a restitution program crafted by state regulators including the Arizona Department of Insurance, attorneys representing Prudential customers, and company officials.
Anyone who purchased more than one policy will receive a separate packet for each policy bought.
Under the restitution or remediation program, customers who file sales-related claims will have their complaints reviewed on an individual basis. Depending on the nature of the complaint and the evidence to support the complaint, customers could be eligible for full or partial refunds of premiums plus interest, continued coverage with no additional premiums due, or other relief.
The packets being mailed will explain the restitution program that is the result of two separate but related settlements involving Prudential that are in the process of being merged to create one nationwide restitution program.
In July of this year, Prudential entered into consent agreements with the Arizona Department of Insurance and the insurance regulators in forty-two other states, and the District of Columbia
On September 24, Prudential and attorneys who represent customers who filed a putative class-action lawsuit entered into a separate agreement that accepts all, and builds upon some, of the features of the state regulators' agreement.
The putative class-action lawsuit is pending in U.S. District Court in Newark, New Jersey before Judge Alfred M. Wolin. The proposed settlement requires federal court approval.
Under the state-approved program announced on July 9, informational packets were to be mailed in New Jersey by October 6. However, in the wake of the September 24 announcement that Prudential and the plaintiffs' attorneys had reached a tentative settlement in the federal lawsuit, Director King agreed to allow Prudential to delay the mailings.
The delay allowed stated insurance regulators to review the terms of the court settlement and to explore how the two similar programs could be meshed into a single program to benefit policyholders. Today, Director King signed an amendment agreement that would give Arizona policyholders the same benefits outlined in the proposed federal class-action settlement.
The proposed class-action settlement provides additional relief and procedural safeguards to customers, some of which the company has agreed to implement when the remediation program begins on February 1, regardless of whether the class-action settlement has been approved by Judge Wolin.
The proposed class-action settlement includes additional features to enhance the relief ordered in the state regulator's July consent agreements which will be implemented at the end of the remediation program if the class-action settlement is approved by the court and any appeals to the settlement are exhausted.
Key among those enhancements are certain financial guarantees and minimum payment obligations. Prudential has agreed to pay at least $410 million to settle claims. The total payouts will depend on how many customers file claims.
On October 28, Judge Wolin signed an order that conditionally certified for settlement purposes the suit as a class-action lawsuit. The order is required under federal court procedures in order for the judge to schedule a hearing. The judge has scheduled a January 21, 1997 hearing to consider the fairness, reasonableness and adequacy of the proposed settlement.
Consumers who may have claims against Prudential do not need to take any action now to receive relief under the proposed class-action settlement, King said. They will receive a second mailing that will include a claim form and instructions for filing their complaints.
However, consumers who wish to opt out and be excluded from participating in the class-action settlement or object to it are required to file their objection with the federal court by December 19. Details on how to opt out, and the ramifications of it, are included in the informational packets.
Consumers who exclude themselves from the class retain the ability to bring their own lawsuits against Prudential, but are ineligible for relief provided under the class-action settlement. Consumers who remain in the class are barred from bringing their own lawsuits separately against the company but will be eligible for relief under the class-action settlement.
Arizona consumers should await receipt of their packets and read them carefully. If they have any questions, they may call 1-800-736-8913, which is staffed by members of an independent entity hired by Prudential and monitored by both state regulators and attorneys for the class-action plaintiffs.
Consumers may also contact the Arizona Department of Insurance, Consumer Assistance, at 602-912-8444.