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Prudential to settle?
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September 24, 1996: 12:10 p.m. ET
Report: Insurance firm to pay up to $1B over questionable sales practices
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NEW YORK (CNNfn) - Prudential Insurance Co. of America will reportedly pay at least $410 million -- and perhaps $1 billion -- to settle lawsuits brought by policyholders who claim agents duped them into buying costly insurance coverage.
The Wall Street Journal said Tuesday that the class-action settlement will pay perhaps 220,000 policyholders at least $2,300 each, plus punitive damages.
The final price tag for Prudential could reach $1 billion, but sources told the Journal that a $770 million price tag appears more likely.
At the minimum, sources told the paper, Prudential expects to pay at least $410 million.
Even then, the company will still face dozens of lawsuits brought by individuals who do not want to participate in a class-action settlement.
Additionally, a settlement, which the Journal said Prudential could announce as early as Tuesday, would need approval from a Newark, N.J., federal judge.
Plaintiffs claim that over a 15-year period, some Prudential agents -- using a practice called "churning" -- duped many customers into using existing policies' cash value to buy even more expensive coverage.
Many of the alleged victims had been elderly.
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