TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty announced today that agreements have been reached between five Nationwide companies, and the Florida Department of Financial Services (DFS) -- Chief Financial Officer Jeff Atwater, the Florida Office of the Attorney General (AG) -- Attorney General Pam Bondi, and the Florida Office of Insurance Regulation (Office) along with six other lead states.
The agreements require Nationwide to implement a process to pay the beneficiaries or the state’s unclaimed property division when they identify that an insured has died. Since the multi-state examination began, the company has identified 4,747 unclaimed death benefits, and has already paid $144.1 million to beneficiaries. The agreement also requires payment of $7.2 million to the states.
“The Nationwide agreement is the third national agreement concluded through the NAIC’s Task Force formed to address this very important issue,” remarked Insurance Commissioner Kevin McCarty. “This agreement demonstrates our joint commitment to reach national settlement agreements with life insurance companies to pay benefits rightfully owed to policy beneficiaries. This is about returning money to consumers – but more importantly, the industry is changing its practices to create future safeguards to make sure beneficiaries are paid benefits to which they are entitled.”
“When Floridians put their family’s needs in another’s hands, they have a right to know their company will deliver on its promises and be transparent in its dealings,” CFO Atwater said. “Companies doing business in our state will be held accountable for promptly fulfilling their contractual obligations and honorably dealing with their customers.”
"Life insurers are obligated to do their due diligence in locating beneficiaries and making payments to them in a timely manner,” remarked Attorney General Pam Bondi. “Through this national settlement, we are ensuring that beneficiaries receive the money that has been owed to them, and we are restoring integrity to the life insurance industry."
The states have joined together to change the way that life insurance companies handle claims when the companies have evidence that an insured has died, and many of the largest companies in the industry are agreeing to search proactively for beneficiaries. Normally life insurance claims are filed by beneficiaries, but in a small percentage of cases, the insured’s family is unaware of a policy and does not make a claim- in some cases for many years. Insurance companies can find out through the use of the Social Security Death Master file that an insured has died. The insurance companies that have signed these multi-agency, multi-state agreements have committed to build systems to run the Death Master file against their records periodically and when they identify that an insured has died, to conduct a thorough search for beneficiaries. The companies must either pay the beneficiaries or pay the state unclaimed property departments in a timely manner.
This agreement is the result of a joint investigation undertaken with the Office, the Department of Financial Services, and the Attorney General, and coordinated with the insurance departments of California, Illinois, New Hampshire, North Dakota, Ohio and Pennsylvania. Often, beneficiaries can be found by the unclaimed property departments. Florida’s unclaimed property is handled by CFO Jeff Atwater’s office. Through outreach and advertising, the Florida Unclaimed Property Division returned over $211 million dollars to Floridians last year.
As part of the agreement, Nationwide agreed to:
- Begin monthly checks against the Death Master File of its life and annuity insurance files, and develop a procedure for a “thorough search.”
- Adopt business reforms to locate policyholders and beneficiaries via a “thorough search” within 120 days of an insured’s death, unless company receives notice of such death.
- In the event that Nationwide locates the beneficiary following a “thorough search,” Nationwide is required to provide the appropriate claims forms or instructions to assist the beneficiary in making a claim.
- For a period of 36 months, Nationwide shall provide to the lead states quarterly reports about the implementation and execution of the requirements of the agreement.
- Thirty-nine (39) months following the conclusion of this agreement, the lead states will conduct a follow-up examination to determine compliance with the agreement.
It is too early to determine the exact amount of money that will be received by the state of Florida from this agreement; states have until December 7, 2012 to sign the agreement, and share in the payment allocation. In early 2011, the National Association of Insurance Commissioners (NAIC) formed the Investigation of Life/Annuities Claim Settlement Practices Task Force chaired by Commissioner McCarty to guide and coordinate the multistate examination process, and conducted public hearings in Florida and California in May 2011 on this issue. Both Prudential Insurance Company of America (Prudential) and MetLife Insurance Companies (MetLife) have reached national agreements through this process; John Hancock Life Insurance Company (John Hancock) reached a similar agreement with Florida prior to the formation of the task force.
The states of Florida, California, Illinois, North Dakota, New Hampshire and Pennsylvania are serving as lead states for examinations of the largest insurance companies focusing on the largest 40 insurance groups, which comprise more than 92% of the market for life and annuity market nationwide; other investigations of large national insurers are ongoing.
Consumers can access more information about the Nationwide, MetLife, Prudential or John Hancock settlement agreements by accessing the DFS Division of Consumer Services’ webpage at: www.myfloridacfo.com/consumers/ or the Office’s webpage regarding the Life Claims Settlement Practices. To search for or claim unclaimed property, visit www.FLTreasureHunt.org, or call 1-88-VALUABLE or (850) 413-3089.