Policyholders

BOSTON -- John Hancock Mutual Life Insurance Co.'s board approved yesterday plans to convert the sixth-largest U.S. policyholder-owned life insurer to a publicly traded company, a move that will help it make acquisitions and raise capital.Boston-based John Hancock is one of a handful of large U.S. mutual insurers making the switch to public ownership. Once it goes public, the company will be able to issue shares to raise money or use its stock as currency to purchase other financial-services companies.

NEW YORK -- Metropolitan Life Insurance Co. has agreed to a $1.7 billion settlement of class action lawsuits by policyholders claiming that they were deceived by the sales practices of the second-largest U.S. life insurer.The New York-based company, a mutual insurer owned by its policyholders, said yesterday that it expects the settlement to cover three class action suits and "dozens" of other actions.The settlements were reached with plaintiffs' lawyers and affect 7 million current and former policyholders.

WHAT PASSES for justice in the class action lawsuits against life insurance companies continues to plod its tragic way through the courts. Tragic, because so many trusting people aren't being made whole.I keep hearing from Prudential policyholders who feel that the mediation process, set up to right their wrongs, didn't come anywhere close to replacing what they'd lost.On another front, a deadline is fast approaching for about 7 million policyholders of Metropolitan Life.The MetLife lawsuit, like the suit against Pru and some other insurers, alleged a number of deceptive sales practices.

With billions of dollars at stake and after little debate, New Jersey lawmakers are poised to adopt legislation governing the reorganization of Prudential Insurance Co. of America that consumer advocates say contains troubling loopholes that could shortchange nearly 11 million policyholders.The legislation, which was drafted by Prudential in meetings with state regulators and comes up for a vote today in the state Assembly, provides a framework for distributing stock to the policyholders as Prudential shifts from a mutual insurer, nominally owned by its customers, to a publicly traded company.

Two of Baltimore's oldest life insurance companies, Home Mutual Life Insurance Co. and Baltimore Life Insurance Co., said yesterday that they plan to merge, creating a company with more than $700 million in assets.If the merger is approved by policyholders and the Maryland insurance commissioner, the combined company will be called Baltimore Life.The companies said they hope to close the merger by Sept. 30.L. John Pearson, president and chief executive officer for Baltimore Life, said the merger would not result initially in any loss of jobs, and the company is not embarking on an acquisition or merger strategy.

NEWARK, N.J. -- Prudential Insurance Co. of America, the biggest U.S. life insurer, said yesterday that it is considering becoming a publicly traded company to increase its value to policyholders who suffered from the firm's billion-dollar scandals.The 125-year-old insurer, after rival Equitable Cos.' 1992 demutualization, said it may become a shareholder-owned company instead of a mutual owned by policyholders. Such a reorganization would "distribute the full value of the company," said Arthur Ryan, Prudential's chairman and chief executive.

SOME OF the policyholders who were cheated by the Prudential Insurance Co. of America think they're getting a runaround.In 1996, Prudential confessed to bilking unknown numbers of customers. The company agreed to $60 million in fines and has set aside $2 billion for restitution. Policyholders were eligible for some sort of offer if they bought cash-value insurance from Pru any time from 1982 through 1995.Rene Schreiner, 37, a book editor in Prospect Heights, Ill., started complaining about her Pru policy almost from the day she bought it in 1988.

NEWARK, N.J. -- Prudential Insurance Co. of America could pay as much as $3.38 billion, more than twice what the company expected, to settle a sales fraud lawsuit, a lawyer for policyholders said yesterday.Melvyn Weiss told a federal judge the cost of settling claims depends on how many policyholders ask for compensation. Prudential, the largest U.S. insurer, misled life policyholders for 13 years and will face at least $2 billion in payments, the lawyer estimated.The more claims, "the higher this number gets, and Prudential has agreed to stand by it no matter what the price is," Weiss said at a hearing in U.S. District Court in Newark, N.J.Lawyers for both sides yesterday urged U.S. District Court Judge Alfred Wolin to approve the settlement of the class-action lawsuit, which claims Prudential's agents persuaded customers to needlessly exchange life insurance policies for more expensive ones from 1982 to 1995.

The Injured Workers' Insurance Fund declared a $10 million dividend yesterday to more than 27,000 Maryland employers who are policyholders of the Towson-based insurance company.IWIF was created by Maryland statute more than 80 years ago to make sure worker compensation was available and affordable to all Maryland employers.Paul M. Rose, chief executive of IWIF, said the company is sharing "our financial success with our policyholders.""We don't have shareholders who are looking for quarterly dividends," he said.

NEWARK, N.J. -- A federal judge approved a $2 billion settlement yesterday between Prudential Insurance Co. of America and the millions of customers it misled through a practice known as "churning" over 13 years.Prudential will repay customers who bought new life insurance unnecessarily, persuaded by agents intent on boosting their own commissions, from 1982 to 1995.U.S. District Judge Alfred M. Wolin said that "after a careful review and consideration," the court in Newark found that the settlement met standards of "fairness, reasonableness and adequacy" for 10.7 million policyholders.

The insurance industry is seldom at a loss for chutzpah. But even by that standard, the recent claim by some that modest rate relief for drivers insured by the Maryland Automobile Insurance Fund (MAIF) will put private carriers at risk is breathtaking in its audacity. How do industry lobbyists say such things without blushing, laughing or otherwise tipping us off that what they're saying is nonsensical on its face? Surely, it's not easy. A quasi-public agency, MAIF has long served as the state's insurer of last resort.

Actuaries are the people who set rates for insurance companies based on their projections as to how much the company will pay out in the future. But when their predictions are wrong, they tend not to suffer any consequences - and they may even describe it as good news. Well, it may be good news for the company when what its actuaries project it will pay out (which is what the company's rates are based on) turns out to be far greater than what it actually pays out. But it's lousy news for insurance consumers and taxpayers, as Marylanders have learned.

The Maryland Insurance Administration fined Allstate Corp. and its affiliates $750,000 - the largest penalty ever from the regulatory agency - for failing to give tens of thousands of consumers proper notice about their policies, not making required filings with the state, and miscalculating some premiums. Regulators, in announcing the penalty yesterday, said the company has exhibited a pattern of violating state laws regarding consumer notifications. The violations involved the company and its affiliates under the Encompass brand.

Maryland Insurance Commissioner Ralph S. Tyler would like to see the amount that doctors pay out of pocket for medical malpractice insurance kept as low as possible. So would Medical Mutual, the physician-owned company that is by far the state's largest malpractice insurer. But somehow the two are deeply at odds over how to accomplish this. At stake is $68.6 million that Medical Mutual wants to declare as a dividend. The company's proposal calls for $24 million to be distributed to current policyholders as a credit against their 2008 renewal, with the balance returned to the state to offset a taxpayer-financed premium subsidy.

When Steve and Leslie Shaeffer's daughter, Selah, was diagnosed at age 4 with a potentially fatal tumor in her jaw, they figured that their health insurance would cover the bulk of her treatment costs. Instead, almost two years later, the Murrieta, Calif., couple face more than $60,000 in medical bills and fear the loss of their dream home. They struggle to stave off creditors as they try to figure out how Selah can keep seeing the physician they credit with saving her life. "We're in big trouble," Leslie said.

For nearly eight months, Annapolis resident Victoria Wheatley has been battling her insurance companies over coverage of her two-story home, condemned by the city after it was ravaged by Tropical Storm Isabel. Her homeowner's insurance company maintained that floodwaters caused the damages. Her flood insurance company blamed the high winds. After losing the home she had lived in her entire life, Wheatley has yet to receive a dime in compensation. Late yesterday morning, Wheatley met with representatives of the National Flood Insurance Program at South County Senior Center in Edgewater, the latest in a series of outreach meetings in Maryland, Virginia and North Carolina for Isabel victims who believe they have been shortchanged by their insurance companies.

For nearly eight months, Annapolis resident Victoria Wheatley has been battling her insurance companies over coverage of her two-story home, condemned by the city after it was ravaged by Tropical Storm Isabel. Her homeowner's insurance company maintained that floodwaters caused the damages. Her flood insurance company blamed the high winds. After losing the home she had lived in her entire life, Wheatley has yet to receive a dime in compensation. Late yesterday morning, Wheatley met with representatives of the National Flood Insurance Program at South County Senior Center in Edgewater, the latest in a series of outreach meetings in Maryland, Virginia and North Carolina for Isabel victims who believe they have been shortchanged by their insurance companies.

The state insurance commissioner's office took over the day-to-day operations of a Carroll County insurer yesterday after financial reserves fell below legal standards for the underwriter of homeowner's insurance. The Maryland Insurance Administration took the action to help Mutual Fire Insurance Co. of Carroll County increase its reserves, said Insurance Commissioner Alfred W. Redmer Jr. He said the company's 15,000 policyholders would not be affected. "We took corrective action to protect policyholders and employees," Redmer said.

Tropical Storm Isabel, which flooded streets and left millions of people without power, is a reminder that none of us are protected from natural disasters. But after a destructive storm, property owners can protect their finances by making sure they file insurance claims effectively. Begin the process as soon as possible. Inspect your property and document the damage, if necessary, with photographs or video. Make temporary repairs to limit further harm, but do not cover up all evidence.

Monumental Life Insurance Co. said yesterday that it has agreed to pay $37 million to more than a half-million black customers because several companies it purchased had engaged in race-based pricing after July 1974, either through lower death benefits or higher policy premiums. It is not known how many Maryland policyholders are eligible to receive an increased benefit. Under the settlement reached with the Maryland Insurance Administration, $5 million of that amount will be set aside to provide benefits to claimants for whom the Baltimore insurer no longer has records, but who come forward.