Life insurers based in New York have already made $52.6 million in payments to 7,934 beneficiaries as a result of the New York Department of Financial Services’ probe of insurer unclaimed property practices.
The new department combines the New York insurance and banking supervisory agencies.
In announcing the initial results, Benjamin Lawsky, superintendent of the DFS, warned that with the initial 8,000 matches resulting in $52 million for beneficiaries, “even if a small percentage of the one million preliminary matches result in payments, the total amount of payments could be huge.”
He added that, “The Department’s review makes it clear that life insurers should regularly match life insurance policies against a comprehensive death list, rather than just wait for claims to be filed.”
Lawsky’s announcement, however, did not mention a parallel probe announced in early November by New York’s attorney general and comptroller of the same issue.
The payments are the first result of a July 5 order by Lawsky for all 172 insurance companies and fraternal to check their records and report back to the DFS by Oct. 31 regarding their policies for dealing with unclaimed insurance policies and annuities.
Lawsky said his comments today were the first report on date provided to date by life insurers.
Nearly all life insurers provided a report for the first month and most had begun to investigate matches, but had not yet started to make payments, he said.
Those that did report have cross-checked approximately 79.22 million policy records against death data, Lawsky said.
He said this resulted in approximately 2.68 million initial matches. Many initial matches have been eliminated for reasons such as: the policy was not in force at the time of death; the apparent match turned out not to be the same person; or the claim had already been submitted.
He said there are 950,000 initial matches that still need further checking to determine if they are valid. Life insurers have initiated claims processing for payments to 27,889 other matches.
The amount of those payments has not yet been reported to the Department.
He said the earliest year of death for which a benefit payment has been made thus far is 1970, and the largest benefit payment made thus far is $673,485. Insurers are required to pay interest on delayed payments.
Lawsky’s probe is part of a nationwide initiative by insurance departments and treasurer’s offices as to so-called “asymmetrical handling” of policy claims.
That means that the insurers used the Social Security Death Master File very often in order to ensure that annuities with living benefit riders were shut off when policy owners died, but to use this system less frequently to determine whether the owners of life policies or retained asset accounts had died.
Still to be heard from are the state’s Attorney General, Eric Schneiderman, and State Comptroller, Thomas P. DiNapoli.
They said Nov. 3 that they were planed 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.
An New York AG spokesman had not responded to requests for comment by press time.