WASHINGTON BUREAU — The current probe of life insurers’ death benefits payment practices could help beneficiaries and state unclaimed property funds recoup “north of $1 billion,” Florida Insurance Commissioner Kevin McCarty said today.
McCarty, chairman of the task force on life and annuity claim settlement practices at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., made that estimate during a break in a hearing on the unclaimed property issue in Tallahassee, Fla.
The Florida Office of Insurance Regulation organized the hearing to look into allegations that some life insurers may be doing less than they should to determine whether life insurance policy insureds have died and to locate any beneficiaries of insureds who have died, and that some life insurers may be failing to comply with state unclaimed property laws.
The ultimate result of the investigation will be a “template” that will result in guidance and, possibly, model laws that will ensure that life policy benefits go either to the beneficiaries or to state unclaimed property funds, McCarty said.
Regulators began the probe because they learned through audits and other means that life insurers appear to be using different methods for determining when to end annuity benefits payments and for determining when life insurance policy insureds have died, McCarty said.
Florida officials sent subpoenas asking Metropolitan Life Insurance Company, a unit of MetLife Inc., New York (NYSE:MET), and Nationwide Life Insurance Company, a unit of Nationwide Mutual Insurance Company, Columbus, Ohio, to appear at the hearing.
California Insurance Commissioner Dave Jones and California Controller John Chiang plan to hold an unclaimed property hearing featuring a representative from MetLife Monday, and regulators also are looking at 38 other large U.S. life insurers, officials say.
Teresa Roseborough, the MetLife deputy general counsel, disclosed today that the company is in settlement talks regarding the “escheatment” issue with Florida and Illinois. Regulators and MetLife declined to further comment on the settlement talks.
In addition to Florida insurance regulators, the group of officials present at the hearing in Tallahassee included insurance commissioners from several other states and representatives from the Florida attorney general’s office and the Florida controller’s office.
Todd Katz, an executive vice president at Metropolitan Life Insurance Company, said the company began using the Social Security Death Master File database to determine if annuity owners had died in the late 1980s.
The company started using the Death Master File to determine whether life insurance policy owners had died in 2007, Katz said.