Met Life, Nationwide Subpoenaed to May 19 Florida Office of Insurance Regulation Public Hearing on Life Insurance Industry Death Benefit Practices
Apr 25, 2011
The Florida Office of Insurance Regulation (“OIR”) announced on April 22, 2011 that, after its ongoing industry examinations revealed that some life insurance companies may use the Social Security Administration’s (“SSA”) Death Master File (“DMF”) to stop annuity payments, while failing to use this same information to investigate claims for life insurance proceeds to the detriment of policyholders and beneficiaries, a May 19, 2011 public hearing has been scheduled on what is being called an industry-wide practice. Life insurer compliance with unclaimed property laws will also be considered as part of the hearing agenda.
The OIR has delivered investigative subpoenas to Metropolitan Life Insurance Company, along with Nationwide Life Insurance Company requesting that a corporate representative appear in Tallahassee at the hearing to explain their company’s business practices regarding these issues. Although these are the first companies to receive subpoenas, other companies are concurrently being evaluated by the OIR on this issue as well.
Florida is a member of a national task force evaluating life insurer claim settlement practices and compliance with unclaimed property laws. Members of the national task force have been invited to participate in this hearing.
The hearing, which begins at 9:30 a.m. in the Knott Building of the Florida Senate, will be broadcast live on the Florida Channel.
The aforementioned investigations and examinations have been coordinated with the offices of Florida Chief Financial Officer Jeff Atwater and Florida Attorney General Pam Bondi.
The SSA’s DMF contains over 87 million records created from SSA payment records. This file includes the following information on each decedent, if available: social security number, name, date of birth, date of death, state or country of residence (from February of 1988 and prior), ZIP code of most recent residence, and ZIP code of lump sum payment.
On April 22, 2011, Florida joined California and other states in announcing a landmark settlement with insurer John Hancock that they say essentially revealed an industry-wide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies. Instead, according to California State Controller John Chiang, who led the settlement, life insurers would draw down the policies’ cash reserves in order to continue collecting premium payments from the deceased. Once the cash reserves were depleted, the company would cancel the policy. The audits also found that insurers did not routinely cross-check the owners of dormant accounts with the DMF. In other cases, the company had direct knowledge of the death of a policy owner, but still did not notify the beneficiaries. To view the April 22 settlement, click here.
A Colodny Fass representative will attend the hearing and provide a report on the procedings.
Should you have any questions or comments, please contact Colodny Fass.