A slate of major life insurers — the 10 largest doing business in California — are under investigation for the way they handle dormant life insurance policies.
California Insurance Commissioner Dave Jones last week announced a market conduct examination of John Hancock Life Insurance Co., Metropolitan Life Insurance Co., Nationwide Life Insurance Co., New York Life Insurance Co., Pacific Life Insurance Co., Prudential Insurance Co. of America, Sun Life Financial Inc., The Hartford Financial Services Group Inc., The Lincoln National Life Insurance Co., and AEGON Group, including its Transamerica Life Insurance Co. unit.
The examinations will focus on whether insurers 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 California State Controller John Chiang.
'UNFAIR PRACTICES'
“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,” Mr. Jones 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.”
Mr. Jones and Mr. Chiang hosted a hearing last week with Met-Life executives, asking them about the insurer's payment practices and the level of due diligence it performs when using the Social Security Administration's death master file to determine whether to pay beneficiaries.
Regulators have alleged that while insurers use the file to determine which customers have died and stop annuity payments to them, the companies fail to use that information to ascertain whether a life insurance customer has died, to facilitate paying death benefits to beneficiaries.
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.
Last week, the insurer also paid $1 million to Louisiana.
E-mail Darla Mercado at [email protected].
