Life insurance giant, MetLife has settled with more than 30 states over unclaimed life insurance benefits, agreeing to pay close to $500 million.
The states claim that MetLife never provided life insurance benefits to some policyholders, wrote Bloomberg Businessweek. MetLife said it plans to pay $188 million of the $478 million this year; the remainder will be paid out over the next 17 years.
State regulators probed how MetLife utilized the Social Security Administration’s “Death Master” file, which is a database of people who have died, explained Businessweek.
According to California Controller John Chiang, last year’s joint investigative hearing revealed that MetLife was in possession of information on the deaths of some of its life insurance policyholders, but never paid what was due. “These settlements make it clear that if the industry isn’t willing to make the payments legally required, we will take action, including lawsuits, to compel them to do right by their customers,” Chiang told Businessweek.
MetLife claims it has paid for than 99% of its life insurance claims and that it has been collaborating with regulators to ensure all payments are made. “The company has been working with regulators to develop industry best practices and is pleased to announce new processes that will provide an even stronger safety net for the limited number of beneficiaries who do not submit a claim to the company in the normal course of business,” the company said in a statement, said Businessweek.
MetLife said that, in its attempts to locate policyholders, it has implemented a monthly matching process and has created web site to help its customers locate their policies.
Chiang reached similar agreements with insurer John Hancock and Prudential Insurance last year, said Businessweek. Those agreements totaled in excess of $40 million. We also previously wrote that Prudential signed two multi-state settlements in which the company agreed to improve its practices for identifying deceased policyholders, locating their beneficiaries, or forwarding the money to the respective state unclaimed property offices when a beneficiary cannot be located.
Last month, we wrote that a state whistleblower lawsuit filed in Minnesota was seeking $230 million from MetLife Inc. and Prudential Financial Inc. over the way in which both companies handled unclaimed life insurance benefits. According to a prior report from the Minneapolis Star Tribune, the complaint claimed MetLife and Prudential failed to pay benefits on life insurance policies of nearly 600 deceased Minnesota policyholders.
Insurers are supposed to pay death benefits once they learn a policyholder has died. If they are unable to find a beneficiary, most states require that benefits be turned over to their unclaimed property funds.
Investigators in several states have launched probes under the belief that life companies are aware of the death of policyholders when they check the Social Security Administration’s Death Master database, but knowingly suppress their awareness. Significantly, these same insurers have no problem using Death Master information to their benefit, such when as stopping payments to deceased annuitants.