State insurance regulators reached another settlement with a major life insurer over use of the Social Security Administration's Death Master File database to identify policyholders who have died.
Genworth Life Insurance Co. agreed to pay $1.9 million to state insurance departments and to use the database to search regularly for deceased life insurance policyholders so beneficiaries can be paid promptly.
The agreement is the latest in a string of settlements since a national task force of insurance commissioners began investigating the industry's practices of paying death benefits. Insurers routinely used the Death Master File to identify annuity holders who had died so the companies could cut off payments, but did not use the database proactively to find life insurance holders who had died. Regulators estimate that through this practice insurers avoided paying more than $1 billion to life insurance beneficiaries.
Usually life insurance beneficiaries file claims after their loved ones have died and receive payment from insurers. But in some cases beneficiaries don't know about the policies and therefore fail to file claims. Requiring insurers to use the database to find deceased life insurance policyholders will ensure that these beneficiaries get the money owed them.
Illinois served as the lead state in the investigation of Genworth, with support from insurance regulators in California, Florida, Delaware, New Hampshire, North Dakota, Pennsylvania and Virginia.