Life Insurance Probe Scorecard – Nevada Brings in $1M and Investigation Expands to 20
The life insurance probe continues. As we’ve mentioned a few times (as recently as last week), 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 payable to beneficiaries.
We know that at least one company paid California $20 million to settle unclaimed property claims, as well as $3 million to Florida, and that the investigation has expanded to at least 35 states and 10 insurers. Now, we can chalk up another settlement. According to Fox 5 Las Vegas, Nevada “will receive approximately $1 million as the result of an agreement with insurer John Hancock over unclaimed life insurance and annuity contracts.” More worthy of attention is the article’s mention that the investigation now includes 20 insurers.
Thus far, the current stats are:
– states involved: 35 (not sure if it is 35 plus D.C., or 35 including D.C., we’ve seen it both ways)
– insurance companies under investigation: 20
– settlements: at least $24 million
– potential exposure: unknown (but possibly in the billions – with a b)
Also worth noting, last week the New York State Insurance Department issued a directive requiring all 172 life insurers authorized to do business in New York to use the Social Security Administration’s Master File to identify death benefit payments that may be due.