Dead man’s life policy finally pays off

Life insurers have paid $52.6 million in death benefits since New York's banking and insurance regulator forced the companies to use government data to identify cases where they didn't pay claims.

Life insurers have paid $52.6 million in death benefits since New York’s banking and insurance regulator forced the companies to use government data to identify cases where they didn’t pay claims.

Almost 8,000 beneficiaries have received their money, according to a statement last week from the New York Department of Financial Services. Claims are being processed on an additional 27,889 polices for which matches were found.

About 1 million policies need further checking as a result of the department’s probe, officials said.

Insurers have faced increased scrutiny from regulators in California, Florida and other states over unpaid death benefits. MetLife Inc., the largest U.S. life insurer, in the third quarter took a $117 million charge related to unpaid death benefits, while American International Group Inc. added about $100 million to reserves in the second quarter after changing its process for determining when policyholders will die.

“Our findings clearly show that matching life insurance policies against a comprehensive list of recent deaths is essential to ensure that all beneficiaries receive the benefits they are owed,” Benjamin Lawsky, superintendent of the Department of Financial Services, said in the statement.

The regulator said in July that it was directing the 172 life insurers and fraternal-benefit societies licensed in the state to use U.S. Social Security Administration death records or other data to identify deceased policyholders.

The longest wait for a payment was connected to a policyholder who died in 1970, according to the statement. The largest award so far was $673,485.