DOL: Prudential improperly denied group life insurance claims - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Companies
    • Earnings
    • Video
    • Monthly Focus
    • Sponsored Articles
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • AdvisorNews
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Top Stories
Top Stories RSS Get our newsletter
Order Prints
April 19, 2023 Top Stories No comments
Share
Share
Tweet
Email

DOL: Prudential improperly denied group life insurance claims

Image shows the Department of Labor logo over a press conference scene.
The Department of Labor announced a settlement with a major life insurer over claims.
By John Hilton

A federal investigation found that Prudential Insurance Co. improperly denied more than 200 claims made on its group life insurance policies from 2017 to 2020, the Department of Labor announced today.

The DOL reached a settlement with Prudential that prohibits the insurer from denying a beneficiary’s claim based on the lack of evidence of insurability when premiums were collected for more than three months.

“This egregious practice left grieving families without the life insurance for which their loved ones had paid, in some cases, for many years,” explained Solicitor of Labor Seema Nanda in a news release.

"Essentially, in many instances, participants were paying premiums for life insurance policies that never existed," Nanda added in a conference call with journalists.

The Prudential policies that should have been paid come to $3 million to $7 million, DOL officials said. Parallel investigations have found that other life insurers also engaged in similar practices, the DOL said.

It is on the employer to ensure that employees complete the process to meet insurability, DOL officials said, but Prudential also had a responsibility to make sure that had taken place.

Prudential Financial has advised the department that they will voluntarily reprocess denied claims dating back to June 2019 and provide benefits for the claims previously denied based solely on lack of evidence of insurability.

The insurer sent the following statement to InsuranceNewsNet:

"Constructive engagement with our regulators is an important component of doing business the right way, which is foundational to our approach to delivering for our customers, while fulfilling our regulatory obligations. We have worked with the Department of Labor to resolve this matter. We are addressing this with supplemental group life insurance customers that are impacted and providing clear guidance to our customers regarding the responsibilities for maintaining evidence of insurability."

Long practice by Prudential

The settlement follows an investigation by the Employee Benefits Security Administration that found that Prudential offered group life insurance policies to businesses that allowed plan participants to permit payroll deductions to pay for additional, supplemental coverage.

EBSA found that, from 2017 to 2020, Prudential denied more than 200 claims related to this supplemental coverage, on the grounds that the participant had failed to provide evidence of insurability. Investigators also determined that, going back to at least 2004, Prudential collected premiums for this supplemental coverage from participants despite lacking the evidence of insurability.

The settlement also provides existing participants additional protections to ensure that coverage is not denied more than a year after they started paying premiums based on insurability, or based on evidence that they were no longer insurable after they first began making premium payments. Prudential is required to notify all group policyholders of these new processes.

“When workers pay life insurance premiums, they should be confident that their beneficiaries will get the benefits they purchased to provide for their financial security,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “The Employee Benefits Security Administration will take appropriate action against any insurance company that collects regular premium payments from plan participants, and later plays a game of ‘gotcha’ to wrongfully deny benefits based on technicalities like ‘insurability’ after the participant passes away.”

The Employee Retirement Income Security Act of 1974 law that governs the investigation does not permit monetary penalties, DOL officials said. Therefore, no fines were levied on Prudential.

The settlement also notes that group policyholders, such as employers sponsoring plans, who collect premiums may be liable for claims by beneficiaries for supplemental coverage, if they failed to give notice to the participants that Prudential had not approved their evidence of insurability.

Prudential Insurance Company of America is a subsidiary of Prudential Financial Inc., based in Newark, N.J. Founded in 1875, the company and its subsidiaries provide insurance, retirement planning, investment management and other products and services to individual and commercial customers in the U.S. and more than 20 other countries.

As of Dec. 31, 2022, Prudential had over $4 trillion gross life insurance in force worldwide.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

© Entire contents copyright 2023 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Taylor Swift the only celebrity to ask if FTX was pushing ‘unregistered securities’: attorney

Newer

Study finds most Americans want to improve their financial literacy

Advisor News

  • Biden ESG rule survives challenge from 25 red states
  • Making your money last: The two-bucket investment approach
  • Succession Planning: mentorship and strategic planning
  • Social Security overpaid billions to people. Now, it’s demanding the money back
  • Convicted murderer Alex Murdaugh pleads guilty to 22 federal financial fraud charges
More Advisor News

Annuity News

  • Committee of Annuity Insurers Issues Public Comment to Treasury Dept.
  • Annuity sales up 27% through six months, LIMRA reports
  • Indexed annuity products set record of $25.1B in Q2, Wink finds
  • Features, taxation of individual annuities help middle-class Americans feel confident about retirement
  • Oklahoma Insurance Department adopts best interest annuity rule
Sponsor
More Annuity News

Health/Employee Benefits News

  • John Hancock launches Premier Benefit IUL
  • Gov. Reeves announces 11th-hour plan for Mississippi hospital crisis. Opponents pan it as 'too little, too Tate'
  • Feds say thousands of Iowans were disenrolled from Medicaid due to eligibility error
  • Laura Kelly: Kansas lawmakers voted to expand Medicaid before. Do it again.
  • 500K have Medicaid coverage restored after computer problem fixed
More Health/Employee Benefits News

Life Insurance News

  • John Hancock launches Premier Benefit IUL
  • Why aren’t more women buying life insurance?
  • Corebridge Financial to sell UK life insurance business to Aviva
  • Analysis shows decreasing mortality risks for Black, Hispanic life insurance applicants
  • U.S attorney alleges obstruction, seeks stiffer sentence for ‘Annuity King’
More Life Insurance News

- Presented By -

Top Read Stories

  • MAPFRE Insurance faces lawsuit for data breach
  • Low financial literacy may be costing consumers money
  • U.S attorney alleges obstruction, seeks stiffer sentence for ‘Annuity King’
  • Allstate, other insurers among those facing robocall lawsuits
  • Analysis shows decreasing mortality risks for Black, Hispanic life insurance applicants
More Top Read Stories >

Press Releases

  • Hexure Acquires Vive
  • Senior Market Sales Adds EMG Insurance Brokerage to Growing Network of Health and Wealth Companies
  • Investors Preferred Life Insurance Company Names Nikki Pethtel as Its Next President
  • Insurity Celebrates its 15-Year Partnership with RCG Global Services, Marking a Legacy of Trust, Growth, and Digital Transformation
  • Sally Jewell Named Chair of Symetra Financial Corporation Board of Directors
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Companies
  • Earnings
  • Video
  • Monthly Focus
  • Sponsored Articles

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • INN Magazine

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet