John Hancock, Met Life and Nationwide in Florida Office of Insurance Regulation Hotseat for Death Benefit, Annuity Payment Practices; Over $1 Billion May Have Been Witheld from Policyholders
Florida Insurance Regulators Question Met Life, Nationwide About Payouts on Life Policies
Five-hour hearing aimed to smooth path for beneficiaries getting their money
By: Jim Saunders News Service of Florida | Posted: May 20, 2011 3:55 AM
www.newsserviceflorida.com
Regulators from Florida and other states hammered insurance executives Thursday with questions about whether companies are trying hard enough to pay life-insurance claims.
Florida Insurance Commissioner Kevin McCarty is leading a multistate probe that he said could involve more than $1 billion in money owed. Executives from MetLife and Nationwide insurance companies testified under oath during a hearing Thursday -- but McCarty said the probe involves all of the nation’s largest life insurers.
“At the end of the day, we fully intend to … make sure that promises made (by insurance companies) are promises kept,’’ McCarty said.
The five-hour hearing, which drew regulators from as far away as North Dakota, centered on how insurers use a database with the ominous name of the “Death Master File.’’
The U.S. Social Security Administration maintains the database, which includes various types of identifying information about people who have died.
Regulators question whether life insurers have used the database enough to determine whether policyholders have died -- which, ultimately, can start the process of paying claims.
But Todd Katz, a MetLife executive vice president, said 99 percent of his company’s claims come through more ordinary channels, such as beneficiaries reporting the deaths of family members. He described the Death Master File as a “safety net” that can help in other circumstances.
“Our goal is to pay every claim that should be paid – pay it accurately and promptly,’’ Katz said.
Regulators, however, repeatedly questioned MetLife officials about the company’s more extensive use of the Death Master File to find out whether customers with annuities have died.
Essentially, regulators accuse insurers of a double standard in the use of the database: If a company finds out a customer with an annuity is dead, it can stop making payments. But if a customer with a life-insurance policy is determined to be dead, the insurer is required to shell out money.
“It seems to me, that’s a little offensive to people,’’ said Belinda Miller, acting general counsel for the Florida Office of Insurance Regulation.
But Katz said his company is trying to make sure it doesn’t erroneously pay annuities after a customer dies. In such cases, the dead person’s family members could have to pay back the improperly paid amounts.
Thursday’s hearing came a day after the Office of Insurance Regulation announced a settlement with the John Hancock Life Insurance Co. on issues related to the Death Master File.
John Hancock denied any wrongdoing, but agreed to pay $3 million to Florida, with $600,000 waived because of the company’s cooperation. Also, it agreed to take other steps aimed at making sure beneficiaries get paid.
Despite the settlement, McCarty said the investigation into the industry’s practices is in the “beginning stages’’ and could take 18 to 24 months. He said many people don’t know their parents or grandparents had life-insurance policies, making it important that the companies follow through on paying claims to beneficiaries.
But MetLife, which faced heavier questioning than Nationwide, indicated that difficulties can occur in paying claims on what are known as “industrial” policies.
Door-to-door agents sold the low-value industrial policies decades ago, and MetLife says it does not have Social Security numbers for many of the policyholders. Executives said that creates problems in trying to match up information from the policyholders with the Death Master File.
But Michael Consedine, the Pennsylvania insurance commissioner, said policy applications included other information that insurers can use to help track down those policyholders. He said the companies also need to use other technology in the searches.
Insurance company reaches multi-million dollar settlement with Florida
Christine Jordan Sexton
May 18, 2011
www.TheFloridaCurrent.com
Florida Insurance Commissioner Kevin McCarty announced on Wednesday that his office inked a multi-million dollar settlement with one of the largest life insurance companies regarding their handling of annuities and death benefits.
John Hancock denied any wrong doing in the 44-page settlement agreement but agreed to modify its future business practices by Oct. 1. The company agreed to return money -- including interest payments -- to beneficiaries. If someone cannot be found Hancock must report that information to the Department of Financial Services. To pay those claims the company must establish a $10 million “Florida Unclaimed Property Account” which must maintain a balance of at least $7.5 million.
At issue is the alleged practice of insurance companies using a list of everyone who died that is compiled by the U.S. Social Security Administration. While companies use what is known as the Death Master File to stop company payments for annuities, they allegedly do not use the same information to pay death benefits on life insurance policies.
The agreement was announced on the eve of a National Association of Insurance Commissioners task force meeting on the same issue.The NAIC is a voluntary organization of insurance officials in the 50 states, Washington, DC and five U.S.territories.
The group is chaired by McCarty. Other states that are represented on the task force include Illinois, Iowa, Louisiana, New Hampshire, New Jersey, North Dakota, Pennsylvania and West Virginia. Two carriers -- Metropolitan Life Insurance Company -- MetLife -- and Nationwide Life Insurance Company have been subpoenaed to testify at the meeting.
Office of Insurance Regulation spokesperson Jack McDermott said the office also is examining other companies. He said that MetLife and Nationwide were subpoenaed because they also are being investigated in other states. “We have made it clear that we believe this may be an industry practice. MetLife and Nationwide are large companies being examined in other states. Someone has to go first.”
According to the Hancock settlement agreement, the Department of Financial Services launched an investigation into John Hancock’s handling of unclaimed property laws in March 2009. The OIR launched its investigation in April 2009 and the OIR and DFS hired contractor Verus Financial to audit the company.
Subsequently the Attorney General's office joined the investigation.
Hancock agreed in the settlement to pay the three agencies $3 million to recoup investigative costs and attorneys’ fees, although $600,000 was waived due to the company’s “cooperation.”
Tags: Belinda Miller, Death Master File, John Hancock Life Insurance, Kevin McCarty, MetLife, Michael Consedine, Nationwide, News, Office of Insurance Regulation, Social Security Administration, Todd Katz, Government
Insurers may owe $1b in unpaid benefits
By Alexis Leondis
Bloomberg News / May 20, 2011
NEW YORK — Life insurers may be keeping at least $1 billion in unclaimed benefits owed to policyholders, beneficiaries, or states, according to a Florida regulator.
Florida Insurance Commissioner Kevin McCarty, who made the estimate, called it a “conservative number’’ during a conference call with reporters yesterday.
Officials from MetLife Inc., the largest US life insurer, and Nationwide Mutual Insurance Co., the policyholder-owned insurer, were subpoenaed to appear at a hearing in Tallahassee by the Florida Office of Insurance Regulation to explain how they determine when policyholders have died.
“We want to ensure that insurance companies use as much effort to find and pay benefits as they do to find and collect premiums,’’ McCarty said during the call with reporters.
The hearing, which was attended by representatives from about 15 states, was held to help determine whether life insurers use Social Security Administration death records to stop annuity payments, without using that same data to identify policyholders who have died.
Liability for life insurance begins when the company receives proof of death, which is different than what happens in the annuity business, according to testimony by Todd Katz, executive vice president of insurance products for New York-based MetLife. If annuities continue to be paid out to deceased recipients, the insurer may have to reclaim those payments, he said.
MetLife began using Social Security data to stop some annuity payouts starting in the late 1980s, Katz said. The insurance company started using the death list to identify some life insurance policyholders’ deaths around 2004. The insurer used the death record to conduct a sweep of most of its life insurance policies in 2007 and in 2010 decided it would check the list at least once a year. When matches are made, an investigation begins and beneficiaries are contacted, Katz said.
MetLife paid more than $11 billion to beneficiaries in 2010 and turned over $51 million to the states, according to a statement from the insurer.
MetLife has also been subpoenaed to a hearing in California on Monday. The National Association of Insurance Commissioners has formed a task force, led by Florida, to help coordinate investigations into whether companies failed to pay benefits to beneficiaries.
Five-hour hearing aimed to smooth path for beneficiaries getting their money
By: Jim Saunders News Service of Florida | Posted: May 20, 2011 3:55 AM
www.newsserviceflorida.com
Regulators from Florida and other states hammered insurance executives Thursday with questions about whether companies are trying hard enough to pay life-insurance claims.
Florida Insurance Commissioner Kevin McCarty is leading a multistate probe that he said could involve more than $1 billion in money owed. Executives from MetLife and Nationwide insurance companies testified under oath during a hearing Thursday -- but McCarty said the probe involves all of the nation’s largest life insurers.
“At the end of the day, we fully intend to … make sure that promises made (by insurance companies) are promises kept,’’ McCarty said.
The five-hour hearing, which drew regulators from as far away as North Dakota, centered on how insurers use a database with the ominous name of the “Death Master File.’’
The U.S. Social Security Administration maintains the database, which includes various types of identifying information about people who have died.
Regulators question whether life insurers have used the database enough to determine whether policyholders have died -- which, ultimately, can start the process of paying claims.
But Todd Katz, a MetLife executive vice president, said 99 percent of his company’s claims come through more ordinary channels, such as beneficiaries reporting the deaths of family members. He described the Death Master File as a “safety net” that can help in other circumstances.
“Our goal is to pay every claim that should be paid – pay it accurately and promptly,’’ Katz said.
Regulators, however, repeatedly questioned MetLife officials about the company’s more extensive use of the Death Master File to find out whether customers with annuities have died.
Essentially, regulators accuse insurers of a double standard in the use of the database: If a company finds out a customer with an annuity is dead, it can stop making payments. But if a customer with a life-insurance policy is determined to be dead, the insurer is required to shell out money.
“It seems to me, that’s a little offensive to people,’’ said Belinda Miller, acting general counsel for the Florida Office of Insurance Regulation.
But Katz said his company is trying to make sure it doesn’t erroneously pay annuities after a customer dies. In such cases, the dead person’s family members could have to pay back the improperly paid amounts.
Thursday’s hearing came a day after the Office of Insurance Regulation announced a settlement with the John Hancock Life Insurance Co. on issues related to the Death Master File.
John Hancock denied any wrongdoing, but agreed to pay $3 million to Florida, with $600,000 waived because of the company’s cooperation. Also, it agreed to take other steps aimed at making sure beneficiaries get paid.
Despite the settlement, McCarty said the investigation into the industry’s practices is in the “beginning stages’’ and could take 18 to 24 months. He said many people don’t know their parents or grandparents had life-insurance policies, making it important that the companies follow through on paying claims to beneficiaries.
But MetLife, which faced heavier questioning than Nationwide, indicated that difficulties can occur in paying claims on what are known as “industrial” policies.
Door-to-door agents sold the low-value industrial policies decades ago, and MetLife says it does not have Social Security numbers for many of the policyholders. Executives said that creates problems in trying to match up information from the policyholders with the Death Master File.
But Michael Consedine, the Pennsylvania insurance commissioner, said policy applications included other information that insurers can use to help track down those policyholders. He said the companies also need to use other technology in the searches.
Insurance company reaches multi-million dollar settlement with Florida
Christine Jordan Sexton
May 18, 2011
www.TheFloridaCurrent.com
Florida Insurance Commissioner Kevin McCarty announced on Wednesday that his office inked a multi-million dollar settlement with one of the largest life insurance companies regarding their handling of annuities and death benefits.
John Hancock denied any wrong doing in the 44-page settlement agreement but agreed to modify its future business practices by Oct. 1. The company agreed to return money -- including interest payments -- to beneficiaries. If someone cannot be found Hancock must report that information to the Department of Financial Services. To pay those claims the company must establish a $10 million “Florida Unclaimed Property Account” which must maintain a balance of at least $7.5 million.
At issue is the alleged practice of insurance companies using a list of everyone who died that is compiled by the U.S. Social Security Administration. While companies use what is known as the Death Master File to stop company payments for annuities, they allegedly do not use the same information to pay death benefits on life insurance policies.
The agreement was announced on the eve of a National Association of Insurance Commissioners task force meeting on the same issue.The NAIC is a voluntary organization of insurance officials in the 50 states, Washington, DC and five U.S.territories.
The group is chaired by McCarty. Other states that are represented on the task force include Illinois, Iowa, Louisiana, New Hampshire, New Jersey, North Dakota, Pennsylvania and West Virginia. Two carriers -- Metropolitan Life Insurance Company -- MetLife -- and Nationwide Life Insurance Company have been subpoenaed to testify at the meeting.
Office of Insurance Regulation spokesperson Jack McDermott said the office also is examining other companies. He said that MetLife and Nationwide were subpoenaed because they also are being investigated in other states. “We have made it clear that we believe this may be an industry practice. MetLife and Nationwide are large companies being examined in other states. Someone has to go first.”
According to the Hancock settlement agreement, the Department of Financial Services launched an investigation into John Hancock’s handling of unclaimed property laws in March 2009. The OIR launched its investigation in April 2009 and the OIR and DFS hired contractor Verus Financial to audit the company.
Subsequently the Attorney General's office joined the investigation.
Hancock agreed in the settlement to pay the three agencies $3 million to recoup investigative costs and attorneys’ fees, although $600,000 was waived due to the company’s “cooperation.”
Tags: Belinda Miller, Death Master File, John Hancock Life Insurance, Kevin McCarty, MetLife, Michael Consedine, Nationwide, News, Office of Insurance Regulation, Social Security Administration, Todd Katz, Government
Insurers may owe $1b in unpaid benefits
By Alexis Leondis
Bloomberg News / May 20, 2011
NEW YORK — Life insurers may be keeping at least $1 billion in unclaimed benefits owed to policyholders, beneficiaries, or states, according to a Florida regulator.
Florida Insurance Commissioner Kevin McCarty, who made the estimate, called it a “conservative number’’ during a conference call with reporters yesterday.
Officials from MetLife Inc., the largest US life insurer, and Nationwide Mutual Insurance Co., the policyholder-owned insurer, were subpoenaed to appear at a hearing in Tallahassee by the Florida Office of Insurance Regulation to explain how they determine when policyholders have died.
“We want to ensure that insurance companies use as much effort to find and pay benefits as they do to find and collect premiums,’’ McCarty said during the call with reporters.
The hearing, which was attended by representatives from about 15 states, was held to help determine whether life insurers use Social Security Administration death records to stop annuity payments, without using that same data to identify policyholders who have died.
Liability for life insurance begins when the company receives proof of death, which is different than what happens in the annuity business, according to testimony by Todd Katz, executive vice president of insurance products for New York-based MetLife. If annuities continue to be paid out to deceased recipients, the insurer may have to reclaim those payments, he said.
MetLife began using Social Security data to stop some annuity payouts starting in the late 1980s, Katz said. The insurance company started using the death list to identify some life insurance policyholders’ deaths around 2004. The insurer used the death record to conduct a sweep of most of its life insurance policies in 2007 and in 2010 decided it would check the list at least once a year. When matches are made, an investigation begins and beneficiaries are contacted, Katz said.
MetLife paid more than $11 billion to beneficiaries in 2010 and turned over $51 million to the states, according to a statement from the insurer.
MetLife has also been subpoenaed to a hearing in California on Monday. The National Association of Insurance Commissioners has formed a task force, led by Florida, to help coordinate investigations into whether companies failed to pay benefits to beneficiaries.
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