In May, John Hancock Life Insurance Company reached a settlement with the state of Florida over the way it handles <"https://www.yourlawyer.com/topics/overview/Unclaimed-Life-Insurance-Death-Benefits-Lawsuit">unpaid life insurance death benefits. Without admitting any wrongdoing, 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.
According to the Associated Press, the Boston-based insurer also agreed to return funds to life insurance beneficiaries, including interest payments owed since the policy owner died. John Hancock also agreed to do a better job of identifying policyholders who have died and notifying their beneficiaries that they are due death benefits. Finally, the company agreed to turn over funds to Florida as unclaimed property when a beneficiary can’t be located.
In 2009, an audit by the Florida Office of Insurance Regulation determined that John Hancock wasn’t doing enough to notify beneficiaries when they were due death benefits. As weâ€™ve reported previously, insurance companies can use a database prepared by the Social Security Administration called â€œDeath Master,â€ which lists all Americans who die in order to make sure death benefits are paid to rightful beneficiaries. It is known that insurance companies use the database for other parts of their business, but they often ignore it when it comes to paying out claims.
“Companies are using the Death Master File to stop company payments for annuitiesâ€”but do not use this same list to pay beneficiaries of people who have life insurance policies,â€ Florida Insurance Commissioner Kevin McCarty said in a statement issued in May. â€œUnfortunately, this appears to be a pervasive industry practice. The Office appreciates that John Hancock stepped-up and agreed to change its processes before any other company. The agreement with John Hancock will send a strong signal to other companies to audit and modify their practices.â€
Florida is one of several states investigating such practices. In July, it was learned that the New York Attorney Generalâ€™s office subpoenaed nine large insurance companies, including AXA SA, Genworth Financial Inc, Guardian Life Insurance Co of America, Manulife Financial Corp, Massachusetts Mutual Life Insurance Co, MetLife Inc, New York Life Insurance Co, Prudential Financial Inc, and TIAA-CREF, in a similar investigation. The National Association of Insurance Commissioners, an alliance of the statesâ€™ top insurance officials, has also formed a task force to look into death benefit payment practices.