WASHINGTON—New York’s attorney general and comptroller have apparently sidestepped the state’s Department of Financial Services, headed by Benjamin Lawsky, in a new escalation of the probes by states into insurer compliance with unclaimed property laws.
Also joining the fray was Minnesota, which sent out letters Oct. 28 to at least 12 insurers in the state demanding a “comprehensive review” of their companies’ internal records and policies concerning the processing of death benefits.
The request was made in a letter obtained by National Underwriter. The situation is apparently different in Minnesota than in New York, where the state’s Commerce Commissioner, who apparently also functions as insurance regulator, joined with state Attorney General Lori Swanson in undertaking the probe.
Mary Jane Wilson-Bilik, a partner at Sutherland Asbill & Brennan in Washington, D.C., voiced deep concern. Wilson-Bilik, who has been advising several clients on the issue, said the New York and Minnesota action “appears to represent competition amongst the regulators as to who is going to be the toughest on this issue.”
In New York, Attorney General Eric Schneiderman and State Comptroller Thomas P. DiNapoli joined Thursday in vowing “to undertake the largest and most comprehensive investigation of life insurance practices in the country.”
They said the decision stems from data uncovered by both offices that indicated some funds may have been improperly withheld.
Schneiderman said the decision to pursue the investigation stemmed from information uncovered by the Attorney General’s Taxpayer Protection Bureau.
Schneiderman created the agency earlier to probe fraud against the state and local governments. This includes monies owed to the state’s unclaimed property fund which might have been improperly withheld, Schneiderman said.
Schneiderman said that, “Our goal is to make sure that life insurance companies make good on their promises to beneficiaries and their obligations to the state of New York.”