Kevin McCarty, Florida insurance commissioner, recently told Fox Business that insurers owe at least $1 billion to beneficiaries. But Jack McDermott, a spokesman for McCarty’s office, said unclaimed amounts could be even higher.
“The truth is, we really don’t know,” McDermott told the Dayton Daily News.
Currently, states hold about $37 billion in unclaimed funds, said Paul MacCready, director of life insurance for Marketsphere. That includes everything from uncashed checks to unused gift certificates. He estimates that unclaimed insurance payouts may add another $2 billion to that total.
Sometimes before a policyholder dies, he or she doesn’t leave up-to-date or correct contact information for policy beneficiaries. Also, policyholders don’t speak with relatives about their policies or those conversations have been long forgotten. And divorces or disputes divide family members and leave insurance companies in the dark.
For about 150 years, insurance companies have usually waited for claims from would-be beneficiaries, MacCready said. Often, carriers would ask for proof of a death, typically a death certificate, he said.
But as the amount of unclaimed funds continues to grow, state governments are increasingly impatient and expect insurance companies to do everything possible to find beneficiaries.
“Essentially, they (insurance companies) have been told they should be looking for dead people,” MacCready said.
In April, McCarty’s office announced a $40 million settlement had been reached with nine insurance companies and the Florida attorney general, the state’s Department of Financial Services and other Florida agencies.
As part of the settlement, Metropolitan Life agreed to strengthen efforts find policyholders and beneficiaries within 120 days of an insured person’s death. Under the agreement, companies will be expected to conduct quarterly matches for a year, and thereafter monthly matches, against the Social Security Administration’s Death Master file to check if an insured has died.
The federal Death Master file is a main source of information for insurance companies.”That is a key component for us,” said Elliott Wallace, LexisNexis vice president and general manager, life insurance.
But Marketsphere’s MacCready said the file, while important, identifies about 95 percent of people who have died. And it does not identify the deceased’s relatives or insurance beneficiaries.
“This is where LexisNexis is going to play a pivotal role,” MacCready said.
While Marketsphere works with insurance companies to help them become compliant with state laws and regulations, LexisNexis can thoroughly mine public data to identify beneficiaries and find where those people are located.
LexisNexis is paid for its work, but a company spokesman declined to elaborate.
It’s no small task. One in five policyholders haven’t provided insurance companies with up-to-date information on beneficiaries, said Jena Kennedy, LexisNexis Risk Solutions director of life insurance, citing a 2011 Nationwide Insurance study.
LexisNexis has “10,000 different sources” to find those who are due unclaimed payouts, Kennedy said. Some states sell the information in bulk.
LexisNexis helps insurance companies learn who has died, then helps the companies find the policy holders’ beneficiaries.
“It’s almost like being a private eye, in some sense,” Kennedy said.
Dennis Ginty, a spokesman for the Ohio Department of Commerce, said the state’s unclaimed funds division seeks to pay Ohioans their unclaimed money, whether that money is from utilities, investment companies, insurance companies or other businesses and institutions.
After a check or account has been “dormant” for a period of time, a company is expected to check with the person who is due the money. “We call that the due diligence process,” Ginty said.
If there is no successful contact with that person, those funds are reported or forwarded to the state division “for safekeeping,” Ginty said. There is no practical limit on how long money can be held, he noted.
Said Ginty, “With the older accounts, it’s more difficult to find the rightful owner.”
The department encourages Ohioans to visit the department’s “online treasure hunt,” where visitors may simply enter their names or the names of family or friends. Go to www.com.ohio.gov/unfd/TreasureHunt.aspx to see it.
Last fiscal year, the department paid 27.5 percent more than than it did in the previous fiscal year, Ginty said. He attributed to an “aggressive outreach campaign.”
The state does invest that money in low-interest or “safe” investments to preserve the principal, Ginty said. It also works with Ohio Housing Finance Agency and provides loans to that agency with unclaimed funds.
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