A few years ago, Sharon Likins learned about the state government’s bounty of unclaimed money turned over by banks, insurance companies and other businesses.
So the Florida retiree went on the state’s “treasure hunt” website and discovered $300 in her late mother’s name — a small bonus from a life insurance policy that she presumably had with Prudential.
The discovery was a pleasant surprise, but it raised a question: What happened to the original policy, which Likins had no idea existed?
“She never mentioned anything about owning a life insurance policy,” said Likins, 69, who resides in the same Palm Coast home where her mother, Wilmuth Likins, had lived until her death in 1997. “I contacted Prudential and they said they didn’t have any record of the policy.’’
Likins’ late mother was among hundreds of thousands of Florida residents from Miami to Jacksonville who took out life insurance policies worth potentially billions, but whose unwitting heirs have never received the proceeds. That’s because Prudential and other major insurers have neither found the survivors nor turned over their unclaimed benefits to the state.
Four years ago, Florida regulators started cracking down on the industry. The state reached settlement deals in 2011 and 2012 with the big three: John Hancock, Prudential and MetLife. The agreements required the insurers to improve their methods for tracking when policyholders have died, and to turn over their benefits to the state if beneficiaries cannot be located.
But in a recently unsealed lawsuit, a company that specializes in recovering assets maintains the state’s settlements were deeply flawed. Lawyers for Total Asset Recovery Services say the agreements amount to a “windfall” for the insurers and a “disservice” to retiree-rich Florida. They are asking a Tallahassee judge for the opportunity to prove it.
The suit asserts that Total Asset’s auditors “uncovered a massive fraud upon the state” by the life insurance companies, accusing them of “knowingly failing to report” at least 9,000 unclaimed life insurance policies — including that of Likins’ mother.
On the state’s unclaimed property database, Total Asset found those 9,000 accounts reflected only small profit-sharing bonuses that the insurers turned over to Florida about a decade ago — not the policyholders’ actual life insurance proceeds. And those accounts, which represent a snapshot taken by Total Asset’s auditors, suggest that potentially hundreds of millions, if not billions, of dollars in life insurance benefits have not been paid out in Florida.
“We know this is the tip of the iceberg,” said lawyer Jeffrey Sloman, the former U.S. attorney in Miami now with The Ferraro Law Firm, which is representing Michigan-based Total Asset Recovery. “We know there are a lot more out there.
“It appears as though there’s a systemic practice by the insurance industry to keep their heads in the sand and pretend these people are still alive,” Sloman added.
Total Asset Recovery has asked a Circuit Court judge in Leon County to hold a hearing to determine the “fairness and reasonableness” of the state’s settlements with the insurers. In March, Judge John Cooper put that question on hold while he considers motions by Prudential and MetLife to dismiss the suit this spring. (A third insurer, John Hancock, was dropped as a defendant because it settled so early with Florida regulators.)