New York Regulators Team Up to Investigate Unpaid Life Insurance Benefits & A Scorecard Update
According to an article in Friday’s Wall Street Journal, the NY Attorney General’s Office (the state’s highest ranking law enforcement official) and the NY Comptroller’s Office (the regulator responsible for administering the state’s unclaimed property laws) are both investigating the Empire State’s life insurance companies to determine whether death benefits are being paid on a timely basis. As we mentioned in July, the controversy revolves around the insurers’ use (or, more to the point, alleged non-use) of the macabre sounding “Social Security Death Index” to determine whether or not life insurance benefits have become payable. Though state laws generally do not explicitly require the use of the SSN index, some regulators have complained that insurers use the SSN Index to stop paying annuities (i.e., products that pay out until death), but don’t use that same information with regard to the payment of life insurance benefits (i.e., those products that pay out upon death).
As the Journal article points out, insurance regulators in New York sent a request letter to all insurance companies in the state asking them to check their policy lists against the Index. According to the Journal, the regulators are considering making resort to the SSN index a permanent regulatory requirement. The regulators have issued a press release concerning their joint investigation.
In separate (but related) news, the Rutland (VT) Herald is reporting that Vermont expects to get in excess of $500,000 from a settlement with a national life insurance company regarding the death benefit investigation.