As expected, 22 state insurance departments have joined a settlement agreement with Metropolitan Life Insurance Company (MetLife) finally reaching the required threshold of participating jurisdictions the National Association of Insurance Commissioners (NAIC) announced on May 15.
The NAIC Investigations of Life and Annuity Claims Settlement Practices Task Force, which was formed in 2011, had examined MetLife’s use of the Social Security Administration’s Death Master List that is utilized to identify deceased policy holders.
The examination found a disproportional use of the Death Master List. The findings allege that MetLife, and other insurers were using the list to aggressively determine when annuitants had died in order to cease making payments but gave a lackadaisical effort to determine when life insurance policyholders had died and needed to have benefits paid to beneficiaries.
MetLife has stated that “many of these either did not have a Social Security number or did not provide the company with a date of birth at the time their policies were issued.”
As part of the $ 40 million agreement, MetLife has said they will routinely check the Death Master File in order to determine whether its life insurance policyholders, annuity owners and retained asset account holders have died. MetLife has said it will then make a serious effort to locate beneficiaries and pay claims. If a beneficiary cannot be located within a year from the date of the match on the Death Master File, MetLife will then report the funds as unclaimed property to the respective state agency. The NAIC noted that the agreement could yield over $400 million in unpaid benefits.
The $40 million settlement will be split between California, Florida, Illinois, New Hampshire, North Dakota and Pennsylvania (all lead states) as well as, Alabama, Alaska, Arizona, Connecticut, Delaware, Hawaii, Idaho, Kansas, Maine, Michigan, Nebraska, Oklahoma, Rhode Island, South Carolina, Utah, West Virginia and the District of Columbia. Other jurisdictions have until June 29 to participate in the settlement.