California Investigating MetLife, Nine Other Life Insurance CompaniesSep 29, 2011 | Parker Waichman LLP
California is among several states investigating the way life insurance companies handle unpaid death benefits. On May 23, California Insurance Commissioner Dave Jones held a hearing on the issue, and vowed to conduct examinations of 10 of the biggest carriers.
The insurers targeted by Jones include Prudential Insurance, Nationwide Life Insurance, Hartford Financial Services, Sun Life Financial, Metropolitan Life Insurance, New York Life Insurance, Pacific Life Insurance, John Hancock Life Insurance, The Lincoln National Life Insurance, and the Aegon Group.
The goal is to determine whether the insurance industry has engaged in unfair practices,” Jones said in a statement.
California subpoenaed MetLife, the largest U.S. life insurance company, to testify at the hearing. Jones said he has already uncovered evidence that for two decades MetLife failed to pay benefits to beneficiaries or the state after learning that an insured had died
According to the California Department of Insurance, early findings indicate that life insurers receive information about the death of their policyholders from a database prepared by the Social Security Administration called Death Master. They use Death Master to cut off payments on annuities when an annuity owner dies but do not use that information to identify life insurance policyholders who died and pay their beneficiaries.
In July, it was learned that the New York Attorney General's office subpoenaed nine large insurance companies over similar issues.
Florida is chair of a multi-state National Association of Insurance Commissioners (NAIC) task force investigating life and annuity claims practices. The primary charge of the task force is to coordinate the activities of state insurance regulators in pursuing investigations / settlements regarding possible unfair claims practices. Other states on the task force include California, Iowa, Louisiana, North Dakota, New Jersey, New Hampshire, Pennsylvania and West Virginia.
In May, John Hancock agreed to pay $3 million to the Florida Office of Insurance Regulation and other state agencies to cover investigative costs and attorney fees stemming from the investigation, and to establish a $10 million fund for paying beneficiaries who can’t be contacted.