Following reports that beneficiaries were not contacted concerning payment of life insurance benefits in cases in which the insured had died, the Connecticut insurance department initiated an inquiry into how insurersâ€™ death benefits are being paid and how insurance companies locate beneficiaries of <"http://www.yourlawyer.com/topics/overview/Unclaimed-Life-Insurance-Death-Benefits-Lawsuit">unclaimed death benefits, said Investment News.
Thomas B. Leonardi, the state’s insurance commissioner, said some firms may use the U.S. Social Security Administration’s master death file to stop annuity payments when a policyholder dies; however, they do not always use this data to check dormant policies to find out if the insured has died and payouts are called for, said Investment News.
â€œIt is a double standard that we will not tolerate,â€ Mr. Leonardi said in an announcement, quoted Investment News. â€œConnecticut insurers are put on notice that the department fully expects them to make every effort to locate all beneficiariesâ€”especially in this age of rapid communication and countless databases,â€ Leonardi added.
Most recently, California and John Hancock Life Insurance Co. settled over the insurance companyâ€™s not making timely payment on clientsâ€™ death benefits for a whopping $20 million, wrote Investment News. As we previously wrote, John Hancock, a unit of Manulife Financial Corp., not only agreed to return the complete value of over 6,400 accounts, it agreed to improve how it determines if its policyholders have died.
The state also issued a subpoena to <"http://www.yourlawyer.com/topics/overview/MetLife-Life-Insurance-Lawsuit-Policy-Death-Benefits-Lawyer">MetLife Inc. to appear at a hearing later this month over issues about how it pays death benefits and how it locates beneficiaries, said Investment News. Florida also asked MetLife and Nationwide Financial Services Inc. to appear later this month in a separate meeting over similar concerns.
The cases in California and Florida are part of an investigation by the auditing firm Verus Financial LLC, spanning three years and involving 35 states and 21 insurers, said Investment News. The investigation has focused on compliance with unclaimed-property laws and, for the most part, involves state comptrollers and treasury departments, the entities with unclaimed property jurisdiction, noted Investment News. The Connecticut inquiry is a separate matter and the stateâ€™s treasury department is not involved in audit, said state insurance department spokeswoman Donna Tommelleo, reported Investment News.
â€œMetLife failed to pay life insurance policy benefits to named beneficiaries or the state even after learning that an insured had died,â€ said California Insurance Commissioner, Dave Jones, in a statement, quoted Bloomberg News. â€œMetLife did not take steps to determine whether policy owners of dormant accounts are still alive,â€ according to the statement, quoted Bloomberg News.
According to the most recent assertions, the California controller and insurance commissioner said they â€œare responding to preliminary findingsâ€ from an audit of the insurer â€œindicating that for two decades, MetLife failed to pay life-insurance policy benefits to named beneficiaries or the State even after learning that an insured had died,â€ quoted the Wall Street Journal. The news release discussed how Metlife sold policies to the working-class in the 1940-50s, now valued at about $1.2 billion, said the Journal. The audit initially found that Metlife â€œdid not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries, or the State if they cannot be located,â€ quoted the Journal.
The authorities also assert that the insurer, in at least one case, used cash from one policyholderâ€™s account to pay itself the premium before it â€œcancelled the contract,â€ only after the funds were emptied, quoted the Journal.