Lincoln Financial Group companies are the latest insurer to come under the widening umbrella of the Social Security Administration’s Death Master File (DMF) settlements with state insurance departments, this time with a $12.6 million claim agreement with Lincoln National Life Insurance Co. and various life and annuity affiliates.
The latest agreement was the result of a coordinated multi-state examination among state insurance departments in North Dakota, California, Florida, Illinois, Indiana, New Hampshire and Pennsylvania, with Pennsylvania, home of Lincoln, the lead state in this examination.
Established in 2011, the multi-state examination process of the top 40 life and annuity insurers in the United States is coordinated by the National Association of Insurance Commissioners (NAIC) Life/Annuities Claim Settlement Practices Task Force, chaired by Florida Insurance Commissioner Kevin McCarty. The Lincoln National examination began in August 2011, with an audit beginning a month later relating to the unclaimed property laws of Florida and other states.
With the signing of this latest agreement with Lincoln and the state insurance departments, more than 55 percent of the life and annuity insurance market covered in at least a dozen multi-state sanctions have settled claims practices upon the death of policyholders.
Many of these state actions have previously mushroomed into private action lawsuits filed in Illinois, Ohio and New York against top insurers Prudential and MetLife.
The settlement agreement with Lincoln and other similar insurers focuses primarily on the asymmetrical use of the Social Security Administration’s Death Master File (DMF) solely to cease making annuity payments, not to search for beneficiaries of a life insurance policy who may be due benefits.
For its part, Lincoln has agreed to implement business reforms correcting this practice and to make a multi-million dollar payment, which will be disbursed among the participating states. Florida’s allocation of the $12.6 million payment is expected to be more than $1 million.
Other life and annuity insurance companies are likely still under examination if they haven’t settled yet, with most of the large-sized life insurers having put this behind them now.