More Insurance Settlements Suggest Regulators Moving to Smaller Targets
Frequent readers of this blog are no doubt well aware of the multi-state unclaimed property investigation of life insurers’ claim settlement practices. Generally, the investigation focused on regulators’ complaints that many insurers review the Social Security Administration’s death records to determine whether an annuity policyholder had died, so they could stop paying annuities (which are paid by the insurer until the policyholder dies), but were not using that same information to notify life insurance beneficiaries that the policyholder had died (and thus, that the beneficiaries were entitled to collect on the policy). For their part, the insurers generally denied any wrongdoing, but some agreed to revise their policies. In the interim, a number of states have passed legislation to require life insurers to do periodic checks of their records. More recently, the National Association of Insurance Commissioners is considering guidelines to provide more consistency in the claims handling process.
More recently, the life insurance industry website LifeHealthPro reported on two new settlements with two small or mid-size insurance companies relating to unclaimed property and claims settlement practices. See the LifeHealthPro article for details. As the article notes, the import of these new settlements is the states’ changing focus from the largest insurers to smaller companies. For those small and medium insurers that have been following the state investigations, but hoping it would be limited to the largest players, it may be time to reassess.