West Challenges Terms Of Insurance Settlement At Issue In Dispute Is Distribution Of Some Funds Received From Prudential Insurance

Spokane Sen. Jim West has questioned the propriety of a settlement Insurance Commissioner Deborah Senn negotiated in a case that could affect 100,000 Washington consumers.

The agreement with Prudential Insurance Co. of America called for a $700,000 fine, of which $600,000 was suspended pending fulfillment of other conditions.

Among those was financial compensation by Prudential for expenses the commissioner’s office incurs in the process of seeking restitution for consumers who bought company insurance policies based on misrepresentations by its agents.

Holders of policies purchased between 1982 and 1995 have until June 1 to file a claim with the commissioner. Whatever compensation policyholders receive, probably in lower premiums or other non-cash relief, will be in addition to the fine imposed by the state.

West, in a Feb. 15 letter, challenges Senn’s authority to receive money directly from Prudential for oversight of the restitution process. He also asked for a report on any other similar reviews in the last four years for which her office was compensated.

West cited statutes that say fines collected by the commissioner should be deposited in the general fund.

Senn responded Wednesday in a letter noting her handling of the agreement with Prudential was approved by the Attorney General’s Office.

And she criticized West’s decision to take his concerns public before raising them with her office.

“There are implicit accusations in the way in which you framed your questions that impugn the integrity of this settlement and of me,” Senn wrote.

In an interview, Senn noted she was among only seven insurance commissioners who held out for a better settlement from Prudential than most states accepted.

The result is a better deal for Washington consumers, she said, adding, “I don’t know why Jim West is beating us up over this.”

West, a Republican, chairs the Senate Ways and Means Committee, which helps set the state’s budget. Senn is a Democrat.

West was unavailable for comment Thursday.

In a follow-up letter Thursday, Senn said fines imposed by her office and deposited into the general fund amounted to almost $880,000 in the last four years.

She said the compensation for state expenses that Prudential agreed to pay are considered unanticipated receipts in addition to the fine, not part of the fine itself.

Officials in Senn’s office said they cannot estimate potential policy-holder recoveries in Washington, but noted that Prudential agreed to provide no less than $400 million in compensation nationally for sales practices that included using dividends from existing policies to buy new, more expensive policies during the 1980s and ‘90s.

Many policyholders later received premium notices or learned that the cash value of their first policies had decreased.

Senn spokesman Jim Stevenson said there have been up to 200 calls a day to the toll-free line set up to help consumers with questions about their Prudential policies and the claims process.

The information number is 1-800-627-7938.

, DataTimes MEMO: This sidebar appeared with the story: SENN TO EXPLORE SHREDDING CLAIMS Washington Insurance Commissioner Deborah Senn said she wants to take a look at claims the Prudential Insurance Co. of America may have shredded documents associated with a multistate investigation of fraudulent insurance practices. In October, she signed a consent order resolving complaints about misrepresentations in the sale of Prudential life insurance policies, she said. Since then, allegations of document shredding have surfaced in Massachusetts and Florida, states that, like Washington, did not participate in a settlement with Prudential signed by most states. The company was fined $1 million by a federal court for shredding records related to sales practices in Massachusetts. The new charges claim some Prudential executives may have known how their agents were selling new policies to replace those clients already owned, frequently to the client’s detriment. “Washington policyholders deserve to know the truth,” said Senn, who added that she hopes the new allegations do not snarl an ongoing process to resolve policy-holder claims against Prudential. -Bert Caldwell