Wells Fargo’s bank insurance sales problems may have led to more than 1,000 questionable sales of simplified term life policies between Oct. 15, 2009, and Dec. 12, 2016, according to the settlement document released last week in California.
The California Department of Insurance identified possible problems with 205 simplified term life sales in early December 2017, when it announced that it had started to consider whether to revoke Wells Fargo ability to sell insurance in California.
Concerns about Wells Fargo insurance sales first drew national attention in December 2016, when three former Prudential employees talked raised questions about the term life program in a lawsuit. Prudential and Great-West ended their insurance sales relationships with Wells Fargo after allegations of problems surfaced.
Officials in California announced last week that they have negotiated a $575 million settlement with Wells Fargo on behalf of all 50 states and the District of Columbia. The settlement covers problems with mortgage rate-lock fees and auto loan add-on products as well as problems related to the sale of term life insurance, renters insurance and other products.
Wells Fargo put too much pressure on branch employees to meet overly aggressive sales goals, officials allege in pleadings filed with the Los Angeles County Superior Court.
Regulators have accused Wells Fargo of opening more than 3.5 million unauthorized accounts.
In a stipulated judgment related to the settlement, officials say Wells Fargo set up a program that let bank employees qualify for incentive compensation credit if the employees referred customers to units of Prudential Financial Inc. and Great-West that offered simplified term life insurance.
In some cases, bank employees submitted life policy applications without the customers’ permission and submitted payments for the insurance from the customers’ checking or savings accounts without the customers’ knowledge or consent, according to the judgment.
As of Aug. 31, 2018, Wells Fargo had identified concerns about an unspecified number of simplified term life insurance policies opened with units of American Modern Insurance Group and Assurant, according to the judgment.
Wells Fargo had identified concerns about “over 1,000 simplified term life insurance policies” opened with Great-West and Prudential, according to the judgment.
“These policies either may have been opened without a customer’s consent, involved consensual employee gaming of the incentive compensation system, or involved a customer complaint of lack of consent that could be neither corroborated nor rebutted,” according to the judgment.
As of Aug. 31, 2018, Wells Fargo had remediated or agreed to remediate more than $1.1 million to customers with the identified renters and term life policies, according to the judgment.
— Read California Regulators Allege Wells Fargo Term Life Problems, on ThinkAdvisor.