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 not
taking adequate steps to try to pay out on life insurance policies where information in the
companies' possession indicated that the insureds had died but no claim had been filed. Often,
these companies were using information from 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 20 life insurance companies: John Hancock, Prudential,
Met Life, AIG, Nationwide, TIAA-CREF, ING, Transamerica, New York Life, Aviva, Midland, Lincoln, Genworth, Sun Life Companies,
Symetra Life/ Symetra National Life, Allianz Life of North America/Allianz Life of New York, Guardian Life Insurance Company,
Pacific Life Insurance Company, AXA and Jackson National Life Insurance Company. Parallel settlements with state controllers and
state treasurers require the insurers to remit current unclaimed benefits to the states. Nationally, the life claim settlement agreements
have resulted in returning over $5 billion to beneficiaries directly by the companies and over $2.4 billion 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 $175 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 $53 million already claimed by Florida consumers.
Florida's Regulatory Life Claims Settlement Agreements