Life Insurers Face Double Whammy in New York

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.