Beneficiaries of lost life insurance policies have collected more than $665 million since state regulators began investigating life insurers' claim paying practices, New York Gov. Andrew Cuomo announced.
Regulators in multiple states, including California and Florida, as well as New York, have been investigating the insurance industry's selective use of the Social Security Administration's Death Master File database. They said that while the companies used the database to identify annuity holders who had died so insurers could promptly cut off payments, they did not use the database to search for life insurance holders who had died and whose beneficiaries stood to gain.
Usually after their loved ones die, beneficiaries file life insurance claims, but in some cases families are unaware of the policies and never file claims, losing out on money to which they're entitled.
Multiple states have reached settlements with leading insurers, such as Prudential Insurance Co. of America, MetLife Insurance Cos., John Hancock Life Insurance Co. and Nationwide Financial Services Inc.
Last year New York adopted an emergency rule requiring insurers to conduct regular searches of the Social Security Administration's database to identify when policyholders die and to locate the beneficiaries so the claims can be paid. Cuomo signed a law in December, making the rule permanent. The requirements in New York are similar to those insurers have agreed to follow in settlements.
The New York Department of Financial Services also worked with the life insurance industry to launch the Lost Policy Finder, which helps consumers find misplaced life insurance policies and annuity contracts on deceased loved ones. Requests submitted through the application are sent to insurers, which search to see whether the policies exist.