The issue involving allegedly fraudulent sales of Prudential Financial Inc.'s low-cost life insurance policies by Wells Fargo & Co. branches is poised to become a larger, multistate insurance regulatory investigation.
First New Jersey, Prudential's domiciliary lead regulator, and then California, where the retail bank is headquartered, separately confirmed their own investigations. Now, the New Jersey Department of Banking and Insurance has informed other states and the National Association of Insurance Commissioners of its investigation, and some states have already joined the effort.
The department is already working with specific states as they accept "our invitation to coordinate their investigation with us," Marshall McKnight, a spokesman for the New Jersey Department of Banking and Insurance, wrote in an email in response to questions on the matter. The other states were not named.
McKnight reiterated that the New Jersey department takes the matter "very seriously."
The NAIC has a history of conducting multistate investigations when allegations of fraud or cybersecurity breach issues in the industry or involving specific companies gain traction. If the allegations are discovered to be widespread, they are determined to be best handled on a larger scale, directed by a lead state or a platform of lead states. The multistate platform could come in handy if Wells Fargo has problematic sales, as has been reported, with some renters insurance policies, or with other types of insurance sales at other U.S. companies.
In a brief interview in Miami on Dec. 14, California Insurance Commissioner Dave Jones noted that the California Department of Insurance has the authority to investigate allegations of fake policies and policies sold without a license, which violates insurance law. He said the California Department of Insurance is conducting its own investigation as well as working in cooperation with New Jersey regulators.
Asked if anything had yet been discovered, Jones said he does not make the details of an ongoing investigation public.
The New York Times first reported that Wells Fargo employees had allegedly signed up some retail customers for Prudential's MyTerm products without informed consent or permission. On Dec. 9, the Times reported on allegations of "sham" insurance policies being sold to unwitting consumers.
Prudential announced Dec. 12 that it was suspending the distribution of the MyTerm policies being sold through the bank. These simplified term insurance products were launched in 2007, and Prudential has sold the product through a joint venture with Wells Fargo to the bank's retail customers since 2014.
Sen. Elizabeth Warren, D-Mass. and Rep. Elijah Cummings, D-Md., are leading a Congressional inquiry into the matter.