WASHINGTON — Four more insurers have settled with state regulators over allegations the companies have not properly adhered to state unclaimed property laws, although it appears that the yields from these settlements are dwindling.
The latest settlements were with Hartford Fire & Casualty Group, Securian, Great American Life, and Standard. They were related to use of the Social Security Administration’s Death Master File (DMF) database.
According to the California Department of Insurance, Hartford will pay $2.1 million; Securian $625,000; Great American Life $400,000; and Standard $277,000 to the states participating in the national investigation.
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“All four insurers agreed to reform their business practices to benefit policyholders and use the database to search for policyholder beneficiaries that might be owed benefits from a life insurance policy,” said California commissioner Dave Jones.
Jones said the National Association of Insurance Commissioners has returned more than $6 billion to beneficiaries from the probe.
The states got $2.8 billion, and continue efforts to locate and pay beneficiaries.
However, the amount the states are getting from the latest deals pale in comparison to earlier settlements.
For example, MetLife paid $40 million in fines to settle the claims, which stem from a multi-state task force probe of U.S. life insurers. Prudential paid $17 million, New York Life $15 million, John Hancock $13 million, Lincoln National, $12.6 million, TransAmerica, $11.2 million, American International Group $11 million, XL Specialty $11 million, ING $10.7 million and Travelers $10.5 million.
These statistics were compiled by the Florida and California Insurance Departments.
NAIC is also considering a model law drafted by a sub-group headed by Jones.
The model law would require all life insurers to use the Death Master File to identify deceased policyholders in order to facilitate payment of benefits to their beneficiaries.
California managed the market conduct examination of Standard, North Dakota managed the exam of Securian, and Florida managed the exams of Hartford and Great American Life, each with assistance from the other lead states, Jones said.
“These four insurers have agreed to do the right thing for consumers and to use the Death Master File to determine if a life insurance policyholder died and then to pay benefits,” Jones said.
In addition to the four life claim settlement agreements, a recent multistate market conduct exam of Primerica shows the insurer has properly used the Death Master File symmetrically across all product lines to ensure the company is identifying deceased life insurance policyholders whose beneficiaries are owed life insurance proceeds, Jones said. Primerica is the third insurer found in compliance with the law, following multistate market conduct examinations.
To date, more than 78 percent of the life insurance market by premium volume has either agreed to comply with the law through settlements or has been found in compliance, Jones said.
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