California regulators grilled representatives from Metropolitan Life Insurance Company on the finer points of life policy administration automation today during a hearing on unclaimed property issues.
The California Department of Insurance and the California controller’s office asked MetLife, a unit of MetLife Inc., New York (NYSE:MET), to send executives to testify at the hearing, to address allegations that MetLife has been less conscientious about looking for life insurance policy insureds who may have died than it has about looking for annuity benefits recipients who may have died.
California Controller John Chiang announced in April that Verus Financial L.L.C., Waterbury, Conn., had found evidence of problems with handling of life insurance claims and handling of unclaimed property at many large U.S. insurers.
The California Department of Insurance and the California controller’s office are conducting a market conduct examination of the 10 largest life insurers doing business in California. Investigators will look for evidence of life insurers failing to pay death benefits to beneficiaries after learning that insured individuals had died.
Todd Katz, executive vice president for insurance products at MetLife, said during the California hearing, as he said May 19 during an unclaimed property hearing in Florida, that MetLife had started using the Social Security Administration’s Death Master File to “match,” or “sweep,” its group annuity records on an occasional, largely manual basis in the late 1980s, and that it had started to conduct group annuity sweeps in a more systematic fashion in the mid-1990s.
One reason MetLife waited longer to try to sweep the group life records is that, in most cases, in the group life market, “the employer has the records,” Katz said. “In many situations, it’s the employer that submits the claims.”
A few employers have conducted Death Master sweeps of their own employees’ records, Katz said.
“Not many,” Katz said. “A handful.”
MetLife found that another challenge was that the company had not collected and stored Social Security numbers from insureds on a routine basis until the mid-1980s.
MetLife tried doing life policy Death Master sweeps for three states in 2004 and 2005, and then conducted a sweep of most of its life policies in 2007, Katz said.
MetLife found that it ended up paying more than 99% of the claims that it paid through the regular claims process, rather than through the sweeps, Katz said.