The National Association of Insurance Commissioners (NAIC) has agreed to consider whether to shift gears on its handling of unclaimed property enforcement issues and provide guidance aimed at ensuring what the industry calls “fair and uniform” settlement practices.
On Dec. 4, the Life Insurance and Annuities (A) Committee approved a resolution to undertake a study to determine if recommendations should be made to address unclaimed death benefits, presumably through guidance to insurers and state regulators.
It was made as a multi-state settlement over unclaimed property practices was reached with Lincoln National Group, Philadelphia, Pa. Lincoln agreed to pay a total $12.6 million to the six states that headed the multi-state task force as well as other states that agree to sign on, according to Melissa Fox, deputy press secretary for the Pennsylvania Insurance Department, the lead state in the investigation.
It also agreed to revise a number of business practice reforms, including using the Social Security Death Master File database to search its records for deceased life insurance policyholders so beneficiaries may be paid.
California insurance commissioner Dave Jones said Lincoln National holds roughly 4 percent of the national life insurance market, with over $21 billion in annual premiums. He said that with this latest settlement, life insurers representing over 55 percent of the total national market have conformed or agreed to reform their business practices and use the Death Master File to search for deceased policyholders and make benefit payments.
Michael Arcaro, Lincoln Financial vice president and head of corporate communications, said in reaction to the settlement that, “Paying our policyholders’ life insurance claims is of the utmost importance to us.”
Arcaro added, “We believe that the practice of checking the Social Security Administration’s Death Master File as part of our efforts to identify potential life insurance claims — while not required previously by law in most states and not standard practice within the industry — is an improvement in our business practices, and one that we already started phasing in earlier this year.”
He also said that Lincoln cooperated fully with each aspect of the examination.
“While we disagreed with the departments’ assertions about what was required by law, we thought that certainty was important and warranted settlement,” Arcaro said. “We are pleased to put this matter behind us and, most importantly, to be taking steps to better serve our customers.”