Clarifying Prudential’s Remediation Plan
“Prudential Deceived Clients, Failed to Monitor Impropriety, Report Says” (July 10) gave an incomplete description of the remediation program designed to compensate policyholders who have been harmed by past sales practices of the New Jersey-based insurance company.
The outline of the program could mislead consumers. On behalf of the multi-state task force on Prudential, and as New Jersey’s commissioner of the Department of Banking and Insurance, I must clarify for policyholders how the remediation system will work.
For the first round of review, all claims will, as reported, be reviewed by Prudential employees. However--and this is key to the integrity of the program and to the rights of the consumers--any and all claims that they do not deem eligible for the highest level of compensation must be reviewed by an independent entity.
This is not, as the story calls it, “some independent review.” This required review does two important things for consumers: Claims agreed to by the company will move expeditiously after only the first review. Claims challenged by the company will be immediately removed from the company’s decision-making capacity and reviewed independently. In other words, Prudential does not have the final say, and consumers can appeal decisions.
The story also seems to take issue with the fact that claimants will be required to fill out some forms and provide some documentation in addition to their own recollections of what transpired when they purchased their insurance.
The task force requires that consumers be assigned an advocate to help them organize papers and get ready to file their claims. Quite honestly, this goes further than any complaint process normally would, but we thought it important to provide policyholders with every advantage. And as to filling out forms, the task force does not believe that consumers will be burdened any more through the remediation process than they would by filing a complaint with state regulators or in preparing to meet with an attorney. We believe that they know some preparation for seeking relief will be required.
And finally, I would like to clarify why, for some Prudential policyholders, the “no fault,” or basic claims relief, although limited, is a good option. To receive the benefit, consumers are required to check off a box. That’s it. No documentation or allegation of company wrongdoing is required. For anyone who needs more life insurance or a low-interest loan to pay premiums, this benefit is a plus because the company will be extending coverage to some people to whom they might not otherwise extend it. And while it is true that the company will receive the benefit of the sale or the loan interest collected, no agent will. What normally would have been paid out in commission will be applied to the policyholder.
The story did not make it clear that Prudential is not operating the remediation program independently. Each step of the process will be approved and monitored by the multi-state task force. We are proud of the work we did in documenting the past wrongdoings of the company--work that brought us to this point, where consumers around the nation will have the chance to use a method other than litigation to right past wrongs.
Consumers soon will be deciding whether to participate in the multi-state task force remediation program or to pursue litigation. Some may even decide to do nothing. They need to be able to make an informed decision, and it is unfair to provide them with only half the information needed as they begin to consider which option may be best for them.
ELIZABETH RANDALL
Commissioner
New Jersey Department
of Insurance
