Massachusetts Attorney General Tom Reilly says he reached a settlement with Nationwide Life Insurance Company Inc. yesterday following an investigation of allegedly misleading insurance policies sold between 1997 and 2001.
The settlement calls for Nationwide, Columbus, Ohio, to pay $650,000 in restitution and aid to consumers. It also calls on the company to change sales practices called into question after some consumers alleged the company deceived them into buying policies that exceed their financial means.
Nationwide sold the policies in Massachusetts through local brokers under the New England Advisory Group, Reilly says.
The lawsuit alleged Nationwide misled consumers into accepting policies that were unclear about investment benefits and premium costs. As a result, many consumers saw their policies lapse when they were unable to keep up with their premium payments, the AG charges.
Nationwide admitted no wrongdoing but agreed to pay $600,000 to affected consumers and another $50,000 to the Local Consumer Aid Fund.
Nationwide offered the following response after the settlement: “Our first concern was with our customers affected by this issue. The Assurance of Discontinuance is specific to Nationwide Life Insurance Company of America, the former Provident Mutual Life Insurance Company.
“The conduct in question occurred in the late 1990s, before Nationwide Financial acquired Provident Mutual Insurance Company. Nationwide completed the acquisition of Provident in October 2002.
“We severed ties with the primary agents in question in 2002, prior to the commencement of the Massachusetts Attorney General’s inquiry. Nationwide took the proper action to protect its customers. Prior to the Massachusetts Attorney General’s office inquiry, Nationwide had made restitution with several affected customers.”