Prudential Changes Group Life Claim Rules in DOL Settlement

Labor officials began talking to Prudential about changes in group life claim procedures after a the department’s Employee Benefits Security Administration found that Prudential had denied about 200 supplemental life claims, from 2017 through 2020, based on allegations that group life plan participants had failed to provide evidence of insurability.

In some cases, officials said, Prudential denied claims based on lack of evidence of insurability after insureds had been paying premiums since as far back as 2004.

Labor officials say challenging a claim for lack of evidence of insurability, after the insurer has had ample time to ask for the that evidence, is wrong.

“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,” Lisa Gomez, the assistant secretary in charge of the Employee Benefits Security Administration, said, in a comment included in the settlement announcement.

Eric Schwimmer, a Prudential Insurance Co. of America vice president, signed the agreement for Prudential.

“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,” Prudential said in statement. “We have worked with the Department of Labor to resolve this matter. The impacted claims represent a very small subset of supplemental group life insurance claims where employers had collected premiums without obtaining the required documentation. We are addressing this with the small number of supplemental group life insurance customers that are impacted and continue to provide clear guidance to our customers regarding the responsibilities for maintaining evidence of insurability going forward.”

The U.S. Labor Department building in Washington. (Photo: Mike Scarcella/ALM)