The shower of investigations and accusations of deceptive sales practices by some of Prudential Insurance's agents is becoming a downpour.
Prudential's sales practices are under investigation in 26 states, from New Jersey to California. But the company's actions in Florida, including those by a few agents in the company's Pinellas County office in Seminole, appear to be under particular scrutiny.
At issue is a sales tactic called "churning," the practice of deceptively persuading life insurance policyholders to use cash values built up in paid-off policies to buy new and more expensive policies. In so doing, the agents pocket a commission but potentially undermine the built-up value of the customer's older policy.
In Florida, here's what has happened lately:
The state's Office of the Attorney General and the Department of Insurance issued subpoenas May 12 at Prudential's state headquarters in Jacksonville seeking company records _ including training materials _ going back as far as 1981.
Prudential, which says it does not tolerate churning, said Wednesday that it is cooperating. The company is encouraging customers who have concerns about their policies to call Prudential at (800) 236-6142.
State insurance regulators are investigating 111 open cases about possible churning by Prudential agents in the state. "Our investigation is statewide, but it seems a majority of churning has been in the Tampa Bay area," said agency spokesman Dan McLaughlin.
Prudential's office in Seminole, he added, is part of that investigation.
In recent years, that office on Park Boulevard became one of Prudential's top sales producers. Ron Ward, who ran the office during its surge in sales, recently was granted a leave. The reason given was a medical disability, but the company could not elaborate Wednesday.
Tampa lawyers Chris and Judy Hoyer so far say their caseload against Prudential has roughly doubled since April. They now are handling 40 cases representing about 100 Prudential policyholders who allege churning by Prudential agents. Many of these actions involve some of the agents in Prudential's Seminole office, Chris Hoyer said.
Prudential's headaches from churning allegations are growing elsewhere, too. They are the latest blow to Prudential, already confronted with a widespread sales scandal in its brokerage company and hurt by declining sales.
Prudential Insurance's sales practices are under investigation in 26 states, a more-than-fourfold increase in size and scope since April.
Investigators are looking into allegations that more than 40 percent of Prudential's insurance business in some offices was the result of churning policies of existing customers.
Outside Florida, the company also faces more than a dozen lawsuits, including some seeking class-action status, filed in Connecticut, New Jersey, Kentucky, Illinois and Pennsylvania.
In addition, Donald Southwell resigned last week as president of Prudential Insurance's unit responsible for life-insurance sales to households earning $20,000 to $75,000 a year. Prudential Insurance spokesman Robert DeFillippo declined comment on the reason for Southwell's resignation but said no successor has been named.
_ Information from Bloomberg Business News was used in this report.