Wells Fargo insurance bill $50 million ahead of predictions

Troubled bank has been under the spotlight for its insurance sales practices

Wells Fargo insurance bill $50 million ahead of predictions

Insurance News

By Lyle Adriano

In a recent securities filing, Wells Fargo said that it expects to pay US$130 million to customers it had wrongly pushed auto insurance on – approximately US$50 million more than it had initially projected.

The bank said that it estimates that it will provide about US$100 million in cash remediation and another US$30 million in account adjustments under the plan. In July, Well Fargo said it was expecting to pay out US$64 million of cash remediation and US$16 million in account adjustments.

Wells Fargo was hit with allegations of abusive sales practices last year, with the company reaching a US$185 million settlement in September 2016. Last July, the bank admitted that as many as 570,000 customers may have been charged premiums for auto insurance they did not actually need.

The unnecessary charge may have contributed to a number of vehicle repossessions.

In August, Wells Fargo began sending checks for refunds to affected customers, specifically those with policies placed between January 1, 2012 and September 30, 2016 (the last day when the practice was discontinued).

The Charlotte Observer reported that the time period in which customers may have qualified for remediation has since been extended back to October 15, 2005, quoting Wells Fargo’s securities filing.

Currently, the severance payouts of outgoing Wells Fargo employees have been frozen until the Office of the Comptroller of the Currency can determine each of their involvement in the bank’s allegedly hyper-aggressive sales practices. The bank’s incoming executives may also face vetting from the bureau.

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