Six states announced a settlement with MetLife Inc. and some of its subsidiaries to make it easier for people to learn if they are beneficiaries of life insurance policies.
Officials estimate the agreement could turn up $500 million in life insurance benefits for consumers.
Insurance regulators in California, Florida, Illinois, New Hampshire, North Dakota and Pennsylvania signed the agreement, which will become effective with the signature of 14 additional states.
Under the agreement, MetLife will conduct regular checks of the Social Security Administration's Death Master File to determine whether anyone insured by the company has died. If so, the company will either pay the beneficiary or, if it can't locate the beneficiary, turn the death benefit over to the appropriate state unclaimed property department within one year. The multistate settlement also requires MetLife to pay a total of $40 million to states participating in the agreement and to search for insured people or beneficiaries of low-value or industrial life insurance policies sold in the early 1900s up to 1964.
The face value for national industrial life policies is expected to exceed $400 million, according to the Florida Office of Insurance Regulation.
State officials ordered audits of the industry in 2008 because of concerns that life insurance companies were failing to promptly pay death benefits when beneficiaries were unaware the policies existed. In some instances, companies drew on cash reserves from policies to cover premiums after the policyholders had died and then canceled the policies once the reserves were depleted. Meanwhile, many insurance companies reviewed the Death Master File regularly to stop annuity payments for customers who had died -- but did not use the method to issue life insurance payments.
Last year, the National Association of Insurance Commissioners formed a task force chaired by Florida Insurance Commissioner Kevin McCarty to guide and coordinate the multistate examination process, and conducted public hearings in Florida and California in May 2011. Both Prudential Insurance Co. of America (and its affiliates) and the John Hancock Life Insurance Co. have reached similar agreements with states.
"We will remain vigilant in our review of other large insurance groups and anticipate concluding similar settlements with other companies to ensure that life insurance and annuity beneficiaries receive the benefits to which they are entitled," McCarty said in a media statement.
California, Florida, Illinois, North Dakota, New Hampshire and Pennsylvania are serving as lead states for examinations of the largest insurance companies. During this stage of the task force's work, the focus has been on the largest 40 insurance groups, which control more than 92 percent of the market for life and annuity products nationwide.