It has been a long wait for
many beneficiaries of policies issued by life insurers in the state
of New York but after what have in some cases been decades they are
finally receiving what is due to them.
Thanks to pressure brought to
bear by the state financial services regulator, the Department of
Financial Services (DFS), insurers have made payments totalling
$52.6m to 7,934 beneficiaries. Many more are still
coming.
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The DFS’ probe was prompted
by an investigation carried out by California’s State Controller,
John Chiang. In early-2011 his investigation culminated in John
Hancock, the US unit of Canadian insurer Manulife Financial,
agreeing to make good its failure to pay more than 6,400
beneficiaries of life insurance policies and matured annuities. The
total sum involved was $20m on unpaid policies dating back to
1992.
The California example
prompted regulators in at least 36 states to launch probes into
unpaid death benefits. In New York, the earliest year of death for
which a benefit payment has been made as a result of the DFS’ probe
is 1970. The largest benefit payment made thus far is
$673,485.
In a statement, the DFS
slammed many insurers for not make full use of the US Social
Security Administration’s Death Master File which provides an
up-to-date list of recent deaths. Many insurers, noted the DFS,
have used the data to promptly stop annuity payments once a policy
holder dies but have not used it to determine if any death benefit
payments are due under life and annuity policies and retained asset
accounts.
Not all insurers are at
fault, noted the DFS. A small number of insurers have been
performing regular cross-checks for a number of years, including
MassMutual and Prudential Insurance Company of America. Some other
insurers have more recently adopted regular cross-check procedures,
including MetLife. The DFS noted that efforts began by some life
insurers prior to the department’s inquiry produced an additional
$299m in payments to beneficiaries.
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By GlobalDataMore payments are certain to follow. According to the DFS,
insurers are have initiated claims processing for payments to
27,889 additional beneficiaries and are checking a further 950,000
policies of deceased policyholders.
