The Way Insurance Companies Handle Unclaimed Life Insurance Death Benefits. Connecticut is the latest state to begin a probe into the way insurance companies handle unclaimed life insurance death benefits. Similar investigations are already underway in California and Florida. gain While they seem to have no trouble using a database of all U.S. deaths maintained […]
The Way Insurance Companies Handle Unclaimed Life Insurance Death Benefits. Connecticut is the latest state to begin a probe into the way insurance companies handle unclaimed life insurance death benefits. Similar investigations are already underway in California and Florida.
gain While they seem to have no trouble using a database of all U.S. deaths maintained by the Social Security Administration to decide when to cut off annuity payments to deceased policyholders, they fail to use the same database to check dormant life policies to determine whether insured people have died.
“Connecticut insurers are put on notice that the department fully expects them to make every effort to locate all beneficiaries — especially in this age of rapid communication and countless databases,” Thomas Leonardi said in an announcement of his investigation.
As we’ve reported previously, insurance giant MetLife is already facing such an investigation in California, where company executives have been subpoenaed to testify at a hearing being conducted the state’s controller and insurance commissioner. According to early findings from an audit conducted by the California Controller that started in 2008, MetLife failed to pay life insurance policy benefits to named beneficiaries or the state even after learning that an insured had died. MetLife learned of deaths via the same Social Security database. In some of these cases, MetLife continued making premium payments from the policy holder’s account until the cash reserves were used up, and then canceled the contract.
California regulations require that insurers pay death benefits within three years, or turn the proceeds over to the California Unclaimed Property fund.
MetLife, along with Nationwide Financial Services Inc., has also been subpoenaed for a similar hearing in Florida.
Just last week, the California Insurance Commissioner announced a landmark settlement with insurer John Hancock following a multiyear investigation aimed at determining whether the insurance industry was in compliance with state unclaimed property laws. In a joint press release, the Commissioner and Controller said they believe that these practices are not isolated, but are systemic in the insurance industry.
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