A slate of major life insurers — the ten largest doing business in California — are under investigation for the way they handle dormant life insurance policies.
California insurance commissioner Dave Jones yesterday announced a market conduct examination of Metropolitan Life Insurance Co., Prudential Insurance Co. of America, Nationwide Life Insurance Co., The Hartford Financial Services Group Inc., Sun Life Financial Inc., New York Life Insurance Co., The Lincoln National Life Insurance Co., Pacific Life Insurance Co., John Hancock Life Insurance Co. and Aegon Group, including its
Transamerica Life Insurance Co. unit.
The examinations will focus on whether carriers failed to pay life insurance policy benefits in a timely manner either to named beneficiaries or to the state after learning that an insured person has died. Mr. Jones will work on the investigation with state controller John Chiang.
“The goal of these examinations is to determine whether the insurance industry has engaged in unfair practices in the payment of death benefits under life insurance policies and annuities,” he said. “Initial information from publicly available sources suggests some troubling practices in this area, and we intend to get to the bottom of what appears to be a very troubling trend.”
News of the examinations arrives a day after Mr. Jones and Mr. Chiang hosted a hearing with
MetLife executives, asking them about the insurer's payment practices and the level of due diligence
MetLife performs when using the
Social Security Administration's death master file to determine whether beneficiaries are owed a payment.
Regulators have alleged that while carriers use the death master file to stop annuity payments to the deceased, they fail to use that information to ascertain whether a life insurance customer has passed away.
“We are going to fully cooperate with the investigation,” said Prudential spokesman Bob DeFillippo.
“We welcome the input of Commissioner Jones, Controller Chiang and all other states on this important subject and stand ready to work with them to give regulators comfort that our processes for handling unclaimed property are not only adequate but excellent,” said Todd Katz, executive vice president, insurance products, at
MetLife.
“We stand by our business practices and will cooperate with the inquiry from the California Department of Insurance,” wrote Chad Green, spokesman for Nationwide, in an e-mail.
Likewise, Pacific Life spokesman Tennyson Oyler wrote in an email that the insurer "...believes that its death payment practices are consistent with applicable laws and will fully cooperate with the California Department of Insurance during this examination."
Tim Stone of Sun Life had no comment.
Calls for comment to The Hartford, New York Life, Pacific Life, Lincoln, Aegon/
Transamerica and John Hancock were not immediately returned.
So far, California has settled a complaint against John Hancock valued at $20 million. As part of a similar agreement in Florida, John Hancock paid $3 million to three state regulatory agencies and set up a $10 million fund to help locate lost beneficiaries. Yesterday, the insurer also paid $1 million to Louisiana.
