MetLife, Other Life Insurance Companies Face New York Probe over Death BenefitsJul 6, 2011 | Parker Waichman LLP
MetLife Inc. has been targeted in yet another state probe over the way it handles life insurance death benefits. According to The Wall Street Journal, MetLife and nine other insurance companies recently received subpoenas from the New York Sate Attorney General seeking information on the way the companies identify deceased insured and handle unclaimed death benefits.
MetLife and several other insurance companies face similar probes in California, Connecticut and Florida. As is the case with the other states, the New York investigation is focused on whether or not life insurance companies are doing enough to identify deceased insureds and make payments to beneficiaries. While most insurance policy contracts require beneficiaries to notify insurance companies of potential claims, regulators have started "asking whether that approach is sufficient in an era of robust death database," the Journal said.
Insurance companies can use a database prepared by the Social Security Administration called “Death Master,” which lists all Americans who die to make such determinations. Insurance companies have no issue using this database for other parts of this business, but don't always use it to ensure that beneficiaries entitled to a death benefit are paid.
According to the Journal, the New York investigation is also looking into the way insurers handle unclaimed death benefits, which should be turned over to the state's unclaimed property fund after a certain amount of time has passed. At the same time, the New York Insurance Commission has sent letters to 160 insurers pushing them to use the Social Security database to determine if any death benefits are overdue and report back to the state.
In addition to MetLife, the New York Attorney General has sent subpoenas to units of AXA SA, Genworth Financial Inc., Guardian Life Insurance Co. of America, Manulife Financial Corp., Massachusetts Mutual Life Insurance Co., New York Life Insurance Co., Prudential Financial Inc., and TIAA-CREF. New York's investigation could be particularly potent because it is seeking the subpoenas under the Martin Act, a state law that doesn't require prosecutors to prove intent to defraud, the Journal said.