Life Claim Settlement Practices
One of the more
important things a person can do during their lifetime is to purchase a
life insurance policy to cover final death expenses and possibly even
leave a monetary benefit to their heirs. However, there are times
when a policy purchased years earlier goes unnoticed and unclaimed
following the policyholder’s death.
In 2009, a Florida
market conduct investigation revealed that life insurance companies were
using the Social Security Administration’s Death Master File to stop
paying a deceased person’s annuity, but not using it to search for
beneficiaries of a life insurance policy and
initiate an investigation as to whether benefits were due.
ultimately led to Florida’s Office of Insurance Regulation (Office),
through a joint effort with Chief Financial Officer Jeff Atwater and
Attorney General Pam Bondi, being the first insurance regulator in the
nation to enter into a regulatory settlement agreement requiring
corrective actions pertaining to claims settlement practices and the
reporting and remitting of unclaimed property.
It was also the catalyst for the
creation of a multi-state task force with the National Association of
Insurance Commissioners (NAIC), chaired by Florida Commissioner Kevin
McCarty, to guide and coordinate the national multi-state examination
process. Public hearings were held in Florida and California to probe
into company business practices.
The results of this national
investigation have caused a paradigm shift in the way the entire
industry operates and changed protocols for how they conduct searches to
locate a beneficiary.
The states of Florida, California,
Illinois, North Dakota, New Hampshire and Pennsylvania are serving as
lead states for examinations of the
insurance groups, which comprise more than 92% of the market for
life and annuity products nationwide.
To date, Florida has regulatory settlement agreements with ten life insurance companies:
John Hancock, Prudential, Met Life, AIG, Nationwide, TIAA-CREF, ING Transamerica, New York Life, Aviva and Midland.
Nationally, the life claim settlement agreements have resulted in over
$173 million being paid back to beneficiaries directly by the companies
and over $800 million being delivered to the states, who continue
efforts aimed at locating and paying the beneficiaries.
Florida Consumer Recovery Amounts:
There are two ways the identified
property and/or funds are being returned to Florida consumers:
- Directly from the
life insurance company through improved internal search
processes imposed as part of the regulatory settlement agreements; and,
- Through Florida's Department of
Financial Services' Bureau of Unclaimed Property -- the
insurance company remits property to the state when they are
unsuccessful at locating a beneficiary. Families may then search the
website for a loved one's name to see if there is unclaimed property available
More than $59 million in property
has been identified and remitted to the DFS Bureau of Unclaimed Property
by life insurers as part of the regulatory settlement agreements with
more than $2 million already claimed by Florida consumers.
Florida's Regulatory Life Claims Settlement Agreements