Industry representatives sharply disputed Total Asset’s accusations, saying they strive to pay out life insurance claims owed to all policy beneficiaries.
“We’ve been cooperating [with the state] from the very beginning,” said Newark, N.J.-based Prudential’s chief communications officer, Bob DeFillippo, who declined to comment on the litigation. “Our aim has always been to pay people what we owe them.”
Industry representatives say that when they confirm a policyholder has died and they find beneficiaries, payments are issued.
But that two-pronged process is not as simple as it sounds — and has had a built-in disincentive that works in favor of the insurers, according to Florida regulators. That’s because if insurers cannot verify a death, they can refrain from paying life insurance benefits.
The controversy over the alleged failure of major life insurance companies to pay off the beneficiaries of deceased policyholders has been escalating since 2009.
Regulators in Florida, New York, California and other states discovered that life insurers were using data called the Social Security Death Master File to determine when annuity owners had died so they could stop making payments to them. At the same time, the insurers were not regularly reviewing that same list to verify when life insurance policyholders had died, so their beneficiaries could be compensated.
Under Florida’s settlements with the insurers, they are required to monitor for policyholders’ deaths by regularly checking Social Security’s list. They have up to five years to confirm any deaths and find beneficiaries through a last-known address. If the insurers cannot locate any beneficiaries, the proceeds must be turned over to the state.
Potential beneficiaries can search the state’s public database (www.fltreasurehunt.org) to see if they are due benefits and then claim the proceeds. The state also actively looks for heirs — and has found some whom the insurers failed to locate.
Once the pot of unclaimed money reaches $15 million, the state transfers some of it into a fund for public education. But there is no time limit on making a claim; proceeds from life-insurance policies dating back to the ’40s are still available for claiming.
As part of the state’s settlements, the three insurers have turned over the names of about 10,000 deceased policyholders with unclaimed life insurance benefits: John Hancock (3,083); Prudential (1,590); and MetLife (5,227), records show. Of those, beneficiaries have received 378 John Hancock claims amounting to $1.9 million, 37 Prudential claims for $134,852, and just three MetLife claims for $994.
Also, the three insurers have made $7 million in payments for the cost of Florida’s regulatory investigation and monitoring of the industry’s compliance, according to state officials.
Anna Alexopoulos, a spokeswoman for the state Department of Financial Services, which manages the unclaimed property list, said the latest figures “represent the first of what will ultimately be numerous” benefits turned over by the three companies on accounts dating back potentially decades.
She said the state conducts its own record searches and sends out notices with claim forms to potential beneficiaries.