LOS ANGELES -- California's insurance regulator wants to suspend or revoke Wells Fargo & Co.'s license to sell insurance in the state after accusing the bank of setting up more than 1,400 renters insurance and life insurance policies for customers who never asked for them.
The move, announced late Tuesday, comes after the department launched an investigation last year into the San Francisco bank's insurance brokerage business following the sham accounts scandal in response to allegations from former workers at New Jersey insurer Prudential that Wells Fargo had signed customers up for life insurance policies without their knowledge or consent.
It's not clear what impact, if any, the department's action would have on the bank, which has been taking steps to exit the insurance business. Just this week, the bank finalized the sale of its commercial insurance brokerage and has also sold off its crop insurance business. And last month, the bank announced it was exiting the personal insurance business as well.
The bank does not offer personal insurance policies of its own but has long brokered policies from third-party carriers. The insurance policies in question were offered by Prudential, American Modern Insurance Group and other companies.
Wells Fargo spokeswoman Catherine Pulley said the decision to leave the personal insurance business was not related to the department's investigation, but she offered an apology for the bank's insurance sales practices.
"We are sorry for any harm this caused our customers and we are making things right for them as part of an ongoing remediation," she said. "We will continue to make critical changes to our businesses and operations to better serve customers and build a stronger bank."
The investigation found 1,469 cases in which customers had policies, mostly renters insurance, opened in their names between 2008 and last year. The department said bank workers were not supposed to help customers sign up. Instead, the policies were available for purchase at kiosks in Wells Fargo branches.
However, a legal filing by the department outlining the alleged wrongdoing references language from an internal Wells Fargo report that noted bank workers did have incentives to sell insurance policies that were similar to those that led to the opening of unauthorized checking and savings accounts: incentive pay and sales goals.
The filing said most customers would have had premiums for these policies -- which ranged from $12 to $37 a month -- taken directly from their Wells Fargo accounts.
The department alleged that it would "be against public interest" to allow Wells Fargo to continue to participate in the insurance industry and that its licenses to act as an insurance broker should be suspended or revoked.