Nationwide Suit Nears Settlement

Nationwide Mutual Insurance has tentatively agreed to settle a class-action lawsuit that could result in compensation of up to $100 million for an estimated 650,000 customers.

"We think it is a fair settlement," Nationwide spokesman John Millen said Friday. "It puts the potential for litigation behind us."

The lawsuit was filed against Nationwide and one of its companies, Nationwide Life Insurance, in New York State Supreme Court in February 1997. Policyholders claimed they were misled when they bought one of several types of life insurance policies sold by the company from 1982 through 1997, said New York attorney Marc Gross.

The court gave tentative approval of the settlement Aug. 20 and another hearing is scheduled for Dec. 17.

Gross said some policyholders were told that their life insurance policies would have enough cash value that they would not have to pay premiums after seven to 10 years, and the policies could have enough value to pay for new policies or additional coverage.

But he said customers were not told that if interest rates fell from their historic highs in the 1980s that they would have to continue to pay premiums. Interest rates have fallen dramatically since then.

The estimated 650,000 current and former policyholders who bought 800,000 policies covered by the agreement will receive policy adjustments, discounted premiums and discounted products as part of the settlement. How much each policyholder will receive will depend on the type of policy they had, how long they held it and whether they have evidence as to whether they were misled, Gross said.

"We're satisfied and very pleased that we are able to provide these types of benefits to the aggrieved customers," Gross said. "We are highly optimistic of court approval."

The company said the settlement provides substantial benefit to policyowners and avoids a lengthy court fight.