The John Hancock Companies have agreed with six state insurance regulators to improve even further the steps that they take to ensure the timely pay out death benefit claims to their customers and beneficiaries.
However, in announcing the settlement, Dave Jones, California insurance commissioner, warned that other companies are not being as forthcoming in agreeing to comply with state unclaimed property laws and rules, and that enforcement actions against other insurance companies are likely. He did not elaborate.
Specifically, in his statement, he acknowledged the John Hancock Companies’ role in changing their business practices and settling this case.
“Regrettably, while we hoped that other companies would come forward voluntarily to settle, it appears enforcement actions are necessary to ensure other life insurers reform their business practices,” Jones said.
The settlement is the second with John Hancock, and adds additional safeguards for compliance with unclaimed property rules and policies to those agreed to in an April 2011 settlement with California Comptroller John Chiang.
Other companies have also settled with state regulators. They include MetLife, Prudential, AIG and Nationwide.
John Hancock, based in Boston, is a unit of Manulife Insurance Financial Corp., Toronto.
The agreement with California, North Dakota, Illinois, New Hampshire, Pennsylvania and Michigan was prompted by a multi-state examination of John Hancock’s activities relating to the identification of potentially deceased policyholders, as well as efforts to locate and pay beneficiaries.
It involves life insurance, annuity, and retained asset account benefits to consumers. John Hancock companies will also pay $13.3 million to the states.
The settlement is not effective until 14 other states join the settlement, according to Jones.
The latest settlement with the state insurance commissioners adds additional requirements to some of the steps contained in the Global Resolution Agreement signed with the state controllers and with Verus Financial, LLC, the contract auditor helping states find abandoned property, according to Roy Anderson, Hancock’s vice president of corporate communications.
According to Jones, the latest settlement requires the John Hancock companies to run the Social Security Death Master File or similar databases monthly to determine whether their life insurance insureds, annuity owners, and holders of retained asset accounts (accounts holding insurance benefits paid to beneficiaries) have died.
Through the April 2011 agreement, the John Hancock companies were the first life insurers to agree to turn over to state unclaimed property officials, including Chiang, their unclaimed life insurance, annuity, and retained asset account benefits that were held past state escheatment deadlines, so that unclaimed property officials could search for beneficiaries.
The John Hancock companies also agreed to some prospective business reforms.
But Jones said on Friday that he, along with other state insurance regulators, was determined to make further insurance reforms that are necessary to make sure that companies were using the Death Master File promptly to identify deceased insureds, and thoroughly searching for their beneficiaries before turning over funds to unclaimed property officials.
“This settlement is another important step in our effort to reform industry practices regarding the use of the Social Security Death Master File database,” Jones said.
“As other insurers have done, the John Hancock companies selectively used the database to cut off payments to annuity holders, but did not use the database to identify deceased life insurance insureds and pay their beneficiaries,” Jones said.
“This settlement includes important reforms,” Jones said.