The MetLife Insurance Cos. multi-agency agreement on unpaid life and annuity policies and the reporting of unclaimed property is a landmark agreement in both the terms of business reform and in the amount of money to be returned to consumers, according to NAIC President and Florida Insurance Commissioner Kevin McCarty.
McCarty, who spoke on a conference call yesterday afternoon along with other key members of the investigation team, said the settlement was a “huge milestone” in the settlement of multi-state exams because it was really changing industry practices by making MetLife adopt business reforms whereby they check monthly and as of April 2103, quarterly, against the Social Security Death Master File.
Before, this would have to be settled in court, McCarty noted on the call.
MetLife now has to proactively determine its policyholders status – within 120 days of an insured’s’ death – and then reach out to policyholders and beneficiaries, he said. If an insured or beneficiary cannot be located, the company must remit its monetary value to the state department of unclaimed property.
Other insurers are expected to follow. McCarty said there are eight more global investigations into unclaimed property underway, where settlements could still be reached. Both Prudential Insurance Company of America and its affiliates, and John Hancock Life Insurance Co. have already reached similar agreements with the Florida Department of Financial Services, the Office of Insurance Regulation, and the Florida Attorney General’s office.
During this stage of the regulators’ work, the focus has been on the largest 40 insurance groups, which comprise more than 92.4% of the market for life and annuity products nationwide.
McCarty and other state officials on the call from Florida and Illinois estimated the formerly announced $500 million figure to be returned to consumers could actually total than $667 million, with the industrial block of 708,000 policyholders resulting in at least $467 million to policyholders or beneficiaries.
Then, there could be at least another $200 million in the non-industrial, or life and annuity policy/retained asset accounts held by MetLife area, according to Joel Haber, the appointed examiner for the Illinois Department of Insurance and Florida officials. Illinois was the lead negotiating state on the MetLife settlement.
MetLife said that the total in-force for these industrial policyholders is $438 million, and that it expects $188 million, less than half, will be paid out in 2012, with the remainder being paid out of 17 years.