Aegon, the 10th largest life insurer in the nation, agreed to pay $11.2 million to state insurance regulators and to do a better job tracking down deceased policyholders so life insurance beneficiaries are paid promptly.
The insurance company is among several large insurers that have reached settlement agreements with states since regulators launched an investigation of the industry in 2011.
At issue is insurers' use of a national database listing deaths. Investigators found that life insurance companies used the Social Security Administration's Death Master File to identify annuity holders who had died so they could stop annuity payments, but did not use the list to identify life insurance policyholders who had died. Regulators estimate insurers avoided paying billions of dollars in death benefits to beneficiaries as a result of the practice.
As part of the settlement, Aegon agreed to use the death database to search for deceased life insurance policyholders so beneficiaries are paid.
The agreement is similar to others reached between states and nine major insurers, which together represent 45 percent of the total national market.
Illinois led the investigation of Aegon with support from insurance regulators in California, Connecticut, Florida, Iowa, New Hampshire, North Dakota, Pennsylvania and Vermont.
Other large life insurers, including New York Life, continue to be the subject of investigation by state insurance regulators, the California Department of Insurance said.