State insurance regulators have reached settlements with four life insurance companies regarding payment of unclaimed death benefits, terms of which include paying an aggregate $3.4 million.
The Hartford Financial Services Group, Securian Financial Group Inc., Great American Insurance Group and Standard Insurance Co. (known as The Standard) reached the settlement with five state insurance departments.
Regulators were investigating the companies' use of the Social Security Administration's Death Master File database, which helps insurers identify deceased insurance policyholders and pay benefits to beneficiaries who may not know they are owed money.
Insurance departments have cracked down on insurers over the past several years for using the database in circumstances where it benefited the firm, such as identifying deceased holders of annuity contracts in order to stop making recurring payments, but not using the information when it would pay claims to beneficiaries, regulators claim.
The Hartford's portion of the settlement was $2.1 million; $625,000 for Securian; $400,000 for Great American; and $277,000 for The Standard.
Companies have also agreed to reform business practices as part of the settlement, to “use the DMF on a uniform and timely basis to search for deceased policyholders and make payments to their beneficiaries,” according to an Aug. 4 announcement from the insurance department of North Dakota, one of the states leading the investigation.
Other lead states included California, Florida, New Hampshire and Pennsylvania.
Justin Delaney, a spokesman for The Standard, said its settlement contains no findings of legal or regulatory violations, and that the entirety of the settlement amount covers audit and exam expenses incurred by the states.
Thomas Hambrick, spokesman for The Hartford, said the company's goal “has always been to ensure that life insurance beneficiaries receive their benefits as promptly as possible. We are pleased to have reached resolution on this matter.”
Spokespeople for Securian and Great American declined comment.
To date, state regulators have either reached settlements or concluded the investigation of 27 of the top 40 life insurance companies with regard to death-benefit-payout practices, constituting 78% of the total market by premium volume, according to California's insurance department. Primerica's activity was probed as part of the recent investigation, and was found to be in compliance with the law.
Last year, regulators reached separate multimillion-dollar settlement agreements with Jackson National Life Insurance Co., AXA Equitable Life Insurance Co., Guardian Life Insurance Co. of America, Pacific Life Insurance Co. and Allianz Life Insurance Co. of North America.
Among other insurers who've settled allegations in years past, Prudential Financial Inc.
shelled out $17 million, and John Hancock Financial $13.3 million.
