Florida Office of Insurance Regulation Questions Met Life, Nationwide On Life Insurance Claim Settlement Practices, Social Security Administration Death Master File Usage and Unclaimed Property Compliance
May 19, 2011
The Florida Office of Insurance Regulation (“OIR”), in conjunction with the National Association of Insurance Commissioners (“NAIC”), held a public hearing today, May 19, 2011, on life insurance claim settlement practices, insurers’ use of the Social Security Administration’s Death Master File (“DMF”) and insurer compliance with unclaimed property laws. The hearing followed a “first in the nation” multi-million dollar settlement agreement between the OIR and John Hancock Life Insurance Company to revise the company’s business practices related to these issues.
Met Life and Nationwide were subpoenaed by the OIR and testified at the hearing, which was evidentiary in nature and not intended to be adversarial. Representatives from the offices of Florida Chief Financial Officer Jeff Atwater and Florida Attorney General Pam Bondi participated.
The hearing was opened by Florida Insurance Commissioner Kevin McCarty, who noted that the NAIC has formed a Task Force to examine life insurer claim settlement practices on unclaimed property. He explained that the impetus for today’s hearing stemmed from concerns that many life insurance beneficiaries have not received the benefits owed under their policies.
Commissioner McCarty called upon the Met Life representatives to testify first. He and other State officials questioned the company representatives about their use of the DMF and practices relating to unclaimed property. In responding to the questions, Met Life officials addressed their access to the DMF, the time periods they have used it, and the timing of matching policies with the DMF. OIR officials raised concerns that only selected policies were run through the DMF. State officials also raised issues with the increased frequency of the DMF use, which began in 2010.
CFO Jeff Atwater asked about the demutualization (moving from a mutual company to a stock company) of Met Life in 2000. He expressed concerns that 140,000 policies were sent to Florida’s Unclaimed Property Division in Florida during this process and suggested that Met Life may have been able to more adequately locate potential beneficiaries.
CFO Atwater and other Florida officials also questioned the recent frequent use of the DMF for life policies, when the DMF historically has been used for annuity policies.
Several other state insurance commissioners questioned Met Life representatives specifically in regard to the timing of using the DMF in relation to life insurance. Met Life officials consistently cited changes in technology, policies and data collection as justification for moving to the DMF in 2007.
Following a lunch break, the hearing continued with testimony from Nationwide Insurance Company. Commissioner McCarty posed questions to Nationwide representatives that were similar to those asked of the Met Life officials.
Prior to 2010, Nationwide did not run a DMF on life insurance policies, however, the Nationwide representatives indicated that they plan to do so annually moving forward.
Much of the further questioning was designed to gather facts that would lead to ensuring beneficiaries are able to receive the benefits they are owed in a timely manner.
Commissioner McCarty adjourned the meeting following the Nationwide testimony.
Any interested parties wishing to provide comments relating to the hearing can submit them to the OIR at publichearing@floir.com with the subject title “Life Insurance Hearing.”
Should you have any questions or comments, please contact Colodny Fass.
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