MetLife Inc. has agreed to pay nearly $500 million in a settlement with 20 states over allegations the company didn’t pay life insurance benefits to some of its policyholders. The largest life insurer in the United States will pay about $188 million of the approximate $478 million this year, with the remainder being paid over the next 17 years. California was the lead state in this matter. According to California Controller John Chiang, a state investigative hearing held last year revealed MetLife had information about the deaths of some beneficiaries, but failed to pay what was owed.
The investigation related to the use of the Social Security “Death Master” file, which lists people who have recently died. A number of states have accused insurers of using the list to stop making annuity payments to dead customers, but at the same time not using the list to check whether any life insurance policy holders had passed away.
New York officials have said their own probe into Death Master abuses had led insurers to make more than $260 million in payments to policy beneficiaries who may not have been aware they had money due to them. The recent settlement requires MetLife to restore the full value of any account that was improperly drawn down, comply with state unclaimed property laws and pay 3 percent compounded interest on held amounts from the later of the policy owner’s death or Jan. 1, 1995.
I understand there are still eight active investigations underway into insurance companies’ usage of the Social Security Death Master file. This information comes from the president of the National Association of Insurance Commissioners (NAIC), Kevin McCarty, who is also Florida’s insurance commissioner. He says the NAIC is hoping for global settlements with each of those companies very much like the one announced with MetLife.
Source: Associated Press
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