California Insurance Commissioner John Garamendi on Tuesday announced that Prudential Insurance Co. of America agreed to settle its dispute with the division over alleged abusive practices. As part of the agreement, compensation paid to brokers will be disclosed to consumers, according to a statement by the commissioner.
“This settlement is recognition that brokers, agents and insurers owe their clients truth and honesty in their dealings and I encourage other carriers to follow this example,” Garamendi said. This settlement is similar to one the department reached with UnumProvident earlier this year.
As part of the settlement, Prudential agreed to:
• At or before the time a customer signs a request for employee benefits coverage, Prudential will provide the customer with the base or standard commission to be paid, if any. Prudential will also provide the customer with an estimate of the amount of any contingent compensation expressed as a percentage of premiums paid and disclose all “communication” and “service fees.”
• Prudential will oversee and train its employees on compliance with settlement agreement, ensure that the business reforms are implemented and ensure appropriate personnel are designated to respond to customer inquiries concerning broker compensation issues.
• Prudential will continue to fully and promptly cooperate with the department on ongoing investigations and related proceedings and actions, and will provide an annual confirmation for a period of three years concerning Prudential’s compliance with the settlement agreement.
• Prudential will make information on its broker compensation practices publicly available on its Web site, including the new disclosure requirements required by the settlement.
• Prudential will not enter into any financial relationships, including equity ownership and/or financing, with any brokers.
• Prudential will not sponsor broker production contests or similar programs which provide for compensation or other remuneration (such as trips, gifts, bonuses) to brokers.
The Commissioner has a pending case, The People of the State of California by and through John Garamendi v. Universal Life Resources, Case No. GIC838913 (Cal. Super. Ct. San Diego), against defendants Metropolitan Life Insurance Co., Life Insurance Co. of North America, Connecticut General Life Insurance, CIGNA Healthcare of California Inc., CIGNA Dental Health of California Inc., Hartford Financial Services Group Inc., Hartford Life and Accident Insurance Co., and Hartford Life Insurance Co.
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