CBS Evening News (9/14, story 4, 3:00, Couric) said “earlier this summer,” revelations that Prudential, the “country’s second-largest life insurer,” was “profiting from the death benefits of fallen soldiers was news to almost everyone.” Now, however, a “major development” in the story “points out that this was not the case at the US Department of Veterans Affairs,” which in “September of last year,” amended “its contract with Prudential, ratifying what had been a ten-year-long verbal agreement to allow the insurance company to retain lump-sum death benefits of soldiers and deposit that money into its own account.” On Tuesday, VA “announced a list of reforms to its group life insurance programs, vowing to ‘provide better clarity of payment options’ to the families of fallen soldiers.”
Bloomberg Rewind (9/14, 6:16 p.m. ET) reported, “Bloomberg Markets magazine has learned of a secret deal” in 1999 between Prudential and VA. At that time, VA’s “insurance director e-mailed another VA official, saying the ‘plan could backfire’ and asking, ‘Who is responsible’ if the benefit account set up by Prudential without backing from the Federal Deposit Insurance Corporation ‘goes belly up?’” After noting that VA, “New York State, Georgia, and a House committee” have launched separate investigations of Prudential and the survivors’ accounts, Bloomberg added, “Prudential…says it is in compliance with its contract with Veterans Affairs.” Other Bloomberg TV programs aired similar reports earlier in the day.
VA announces life insurance policy reforms. Bloomberg (9/15, Plungis, Evans) also notes that on Tuesday, VA “said Prudential…will now send beneficiaries of VA life-insurance policies a check when they ask for a lump-sum benefit payment rather than keeping the money and mailing a checkbook. The veterans agency will continue to offer a money-market type account that lets the insurer withhold payments of benefits for survivors of fallen service members, while making clear the funds aren’t insured by the Federal Deposit Insurance Corp. and the accounts aren’t endorsed by the government, the VA said…in a statement on its website.” While the “nonprofit advocacy group,” Veterans for Common Sense, “called the government’s action a positive first step,” Paul Sullivan, the group’s executive director, who said VA “reforms need to go further” so that, among others things, “Prudential repays families” who lost out on interest-earning opportunities while Prudential held their money.
From the American Association for Justice news release.
