Sept. 14 (Bloomberg) -- Bloomberg Markets magazine's David Evans talks about an agreement between the U.S. Department of Veterans Affairs and Prudential Financial Inc. that enabled the insurer to withhold lump-sum payments of life insurance benefits for survivors of fallen soldiers. The veterans agency said today that Prudential will now send beneficiaries a check when they ask for a lump-sum benefit payment rather than keeping the money and mailing a checkbook. Evans speaks with Margaret Brennan on Bloomberg Television's "InBusiness".
This signed amendment to Prudential's contract is the first document to show how Department of Veterans Affairs officials sanctioned a payment practice that has spurred investigations by lawmakers and regulators. Photographer: Jonathan
This signed amendment to Prudential's contract is the first document to show how Department of Veterans Affairs officials sanctioned a payment practice that has spurred investigations by lawmakers and regulators. Photographer: Jonathan
The U.S. Department of Veterans Affairs failed to inform 6 million soldiers and their families of an agreement enabling Prudential Financial Inc. to withhold lump-sum payments of life insurance benefits for survivors of fallen service members, according to records made public through a Freedom of Information request.
The amendment to Prudential’s contract is the first document to show how VA officials sanctioned a payment practice that has spurred investigations by lawmakers and regulators. Since 1999, Prudential has used so-called retained-asset accounts, which allow the company to withhold lump-sum payments due to survivors and earn investment income on the money for itself.
The Sept. 1, 2009, amendment to Prudential’s contract with the VA ratified another unpublicized deal that had been struck between the insurer and the government 10 years earlier -- one that was never put into writing, Bloomberg Markets magazine reports in its November issue. This verbal agreement in 1999 provoked concern among top insurance officials of the agency, the documents released in the FOIA request show.
For a decade, until the contract was formally changed, Prudential wasn’t fulfilling its obligations to survivors of fallen service members, says Brendan Bridgeland, an insurance lawyer who runs the non-profit Center for Insurance Research in Cambridge, Massachusetts.
(More here.)
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