WASHINGTON BUREAU — John Hancock Life Insurance Company says it has negotiated a global resolution agreement relating to life insurance unclaimed property practices with officials in 29 states.
That agreement will take effect June 1, Hancock says.
Hancock, Boston, a unit of Manulife Financial Corp., Toronto (TSX:MFC), says it also has agreed to a settlement with Florida.
The Florida settlement agreement calls for Hancock to pay state agencies $2.4 million to cover the cost of investigative costs and attorney’s fees, and establish a $10 million fund for life insurance policy beneficiaries.
Hancock has denied any wrongdoing.
The settlement and the global resolution agreement are the result of an ongoing investigation of life insurance industry claims handling practices. California launched the probe in 2008, and many other states joined the effort in March.
Verus Financial L.L.C., Waterbury, Conn., a contract auditor that has been helping states find life insurance policy beneficiaries and identify abandoned property, represents 35 states, and more states are likely to sign on to the global resolution agreement, Hancock says.
Hancock negotiated the Florida settlement with three agencies – the Florida Office of Insurance Regulation, the Florida attorney general’s office and the Florida Department of Financial Services.
The multi-agency settlement is part of a multi-state investigation of insurers’ claims handling practices, according to Florida Insurance Commissioner Kevin McCarty.
Florida, along with the other states, found that insurers were using the Death Master File, a collection of data published weekly by the Social Security Administration. to find annuity holders who had died but were not using the file to indentify life insurance policy insureds who had died, McCarty says in a statement.
“Unfortunately, this appears to be a pervasive industry practice,” McCarty says.
Florida investigators looked at records relating to Hancock’s use of the Death Master File, officials say.
Florida regulators reduced the payment Hancock is making to stage agencies by $600,000 in recognition of the company’s cooperation with the investigation, officials say.
John Hancock also has agreed to change its claims handling practices and provide quarterly reports to state agencies for the next three years.
The $10 million beneficiary fund will be used to pay any death benefits and interest payments owed to beneficiaries as the beneficiaries are located.
If the beneficiary cannot be identified, the amount owed will be reported to the unclaimed property division of the Department of Financial Services, officials say.
Hancock says in a statement that the agreement with Florida regulators “represents a landmark for consumers–one that helps John Hancock maintain its place in the forefront of caring for our insureds and their beneficiaries.”
“The new standards established by the agreement are well beyond those required by law or regulation,” Hancock says.
Under the terms of the areement, John Hancock is taking additional steps to ensure that policyholders’ beneficiaries will be located.
If the beneficiaries are not located, the state will hold the funds paid in trust until the true owners come to collect the benefits, Hancock says.
“This agreement is consistent with John Hancock’s longstanding commitment to keeping our promises to owners and beneficiaries of our products,” Hancock says. “Over the past five years alone, John Hancock has paid out death benefits in excess of $800 million on life insurance policies owned by Floridians.”
CORRECTION: An earlier version of this article described the $2.4 million that Hancock has agreed to pay Florida agencies incorrectly. The $2.4 million is being paid to cover the costs of the state’s investigative costs and attorney’s fees.