Life Insurance Probe Continues – New York Gets In On The (Martin?) Act
As mentioned a few times before, a number of states (35 at last count) were looking into the death benefit payment practices of life insurers. In particular, the investigation seems to be focused on whether the insurers are properly determining when death benefits are due to beneficiaries. The states allege that the insurers have traditionally actively researched death index information for annuity products (i.e., where the insurer was paying benefits until the policyholder died) but not using those same sources to determine when life insurance benefits became payble to beneficiaries.
According to an article published yesterday on Bloomberg.com, the New York State Attorney General’s office has issued subpoenas to 10 insurers (presumably the same ones under investigation by California) seeking “documents and information related to the companies’ procedures around abandoned property.” The article also raises the spectre that New York could use the 1921 Martin Act to gather information and punish violations. In the Martin Act sounds familiar, it’s because that same law was previously used by a well-known New York Attorney General to aggressively investigate allegations of securities fraud.