Life insurance companies that have settled with states over unpaid death benefit claims
American Interntional Group, ING America Insurance Holding Group, Northwestern Mutual Group, Aegon U.S. Holding Corporation, White Mountains Group, John Hancock, Prudential, Met Life, AIG, Nationwide, TIAA-CREF, Transamerica, New York Life, Aviva, Midland, Lincoln, Genworth, Sun Life Companies, Symetra Life/ Symetra National Life, Allianz Life of North America/Allianz Life of New York, Guardian Life Insurance Company, Pacific Life Insurance Company, AXA and Jackson National Life Insurance Company.
Source: State of Florida Office of Insurance Regulation
Life insurance tips for beneficiaries
• Review the deceased’s personal papers to learn if there is a life insurance policy on file at the deceased’s last place of residence. Check with the deceased’s bank to determine if he or she maintained a lock box. Many individuals will place a copy of the life insurance policy in a lock box.
• Review the deceased’s personal papers for all other types of insurance policies. If you locate an automobile policy or homeowners policy, contact the company that issued the policies to determine if a life insurance policy also was issued.
• Check the deceased’s address and telephone book to determine if there is any name or names of insurance agents or insurance companies.
• Contact the deceased’s last place of employment to determine if there was a group life insurance policy issued through the deceased’s employer.
• Review canceled checks, credit card receipts and other records for the last several years to determine if any checks were written to pay life insurance premiums.
• Check the mail for at least one year after the deceased’s death to identify any premium notices, annual reports or other communications from a life insurance company.
• Review the deceased’s income tax returns for the past two years to determine if there is any interest income or interest expense from an insurance company is indicated.
• Always contact the state’s unclaimed property office to see if unclaimed money from life insurance policies may have been turned over to the state. If, after a number of years, an insurance company holding the unclaimed proceeds cannot find the rightful owner, it turns the money over to the state. You should periodically conduct this check for an extended number of years.
Source: Ohio Department of Insurance
Tracking payments
Although the Ohio Department of Insurance hasn’t tracked payments to beneficiaries from insurance companies through national settlement agreements, it does offer a program called the Missing Life Policy Search Service that helps consumers track down money they are owed.
The service helps in a search for life insurance policies or annuity contracts purchased in Ohio, using a notarized form filled out by family members or legal representatives. The department forwards the search request to all Ohio-licensed life insurance companies.
Since the program began in 2009, 3,593 people have inquired and the state has made 1,371 matches to life insurance policies, according to David Hopcraft, the department’s spokesman.
By the numbers
$177M: Settlement amounts states have collected from life insurance companies, including $7.1 million in Ohio.
$7.5B: Amount companies have paid in back death benefits to beneficiaries since 2011.
$500M: Amount that has been returned in the state of Florida, either directly to beneficiaries or to the unclaimed property bureau within the Department of Financial Services. Florida led the probe against the insurance companies.
Source: National Association of Insurance Commissioners.
An aggressive effort by the state of Florida to go after insurance companies for nonpayment of death benefits hasn’t been matched in Ohio, which has not publicized the landmark settlements affecting Ohioans and hasn’t tracked payments to beneficiaries to determine if they are getting what they are owed.
Florida’s insurance office in 2009 launched an investigation that revealed the nation’s largest insurance companies were hanging onto billions of dollars that should have gone to the beneficiaries of people who died. Since then, more than 20 companies have paid out billions in back death benefits to beneficiaries across the nation and also made settlements with state after state, including Ohio.
But while Ohio has been a party to the settlements, the state’s insurance office has done little to reach out to consumers to let them know they may be owed money. An investigation by this newspaper found Ohio has collected $7.1 million in settlements from insurance companies since the national probe was launched but has made no effort to identify how much insurance companies have paid directly to beneficiaries. State officials say they aren’t tracking it.
“It’s hard to imagine why the Department of Insurance would keep this under the cloak of darkness,” said Catherine Turcer, a policy analyst with the government watchdog group Common Cause Ohio. “Beneficiaries need to have information, and not everybody knows they are a beneficiary. A discussion about what the Department of Insurance is doing to help people get their money is essential.”
General practice
The settlements have come about because of a general practice of life insurance companies — including the largest brand-name insurance companies in the United States — to pay on policies only when a claim is filed. But beneficiaries aren’t always aware they are due life insurance payouts, and for years companies did not make adequate efforts to find them.
While insurers used the Social Security Administration’s Death Master File to terminate payments under annuity contracts, according to the settlement agreements, they did not use the same information to pay beneficiaries.
The floodgates opened in 2011 when Florida regulators reached a settlement with the John Hancock Life Insurance Co., which admitted to no wrongdoing but said it would revise its business practices and pay millions to settle with the states and seek beneficiaries of policies for payment. Prudential, Metropolitan Life, Nationwide and some 20 other companies followed with similar agreements.
So far, states have collected $177 million in settlement penalties from the negotiated settlements, while beneficiaries have received $7.5 billion in back death benefits, according to the Florida Office of Insurance Regulation, which took the lead along with regulators for the state of Pennsylvania. The back death benefits included more than $5 billion paid directly by the companies to beneficiaries to settle life insurance claims, and more than $2.4 billion delivered to states’ unclaimed property programs.
In Florida alone, more than $500 million has been returned — either directly to beneficiaries or to the unclaimed property bureau within the Department of Financial Services.
But Ohio has done little to publicize the work the National Association of Insurance Commissioners has done in returning billions to consumers. The original task force included seven states: Florida, Pennsylvania, California, New Jersey, Illinois, New Hampshire and North Dakota. Thirteen other states had joined by February 2012, but Ohio isn’t mentioned as participating in the press releases announcing the settlements until most of the remaining states signed onto a $40 million settlement with Met Life in June 2012.
The entire effort has occurred with little public fanfare by the Kasich administration, though a 2011 release did note that Lt. Gov. Mary Taylor, the state’s top insurance regulator who oversees the Ohio Department of Insurance, visited Florida to coordinate Ohio’s participation in the launch of the probe.
Ohio isn’t alone. Other states too, perhaps leery of angering a major employer, have given the news a low profile. Finally, CBS shined a giant spotlight on the settlements with a story last month on the Sunday night program, “60 Minutes.”
David Hopcraft, spokesman for the Ohio Department of Insurance, said a check of department files indicated no notices to the public about the settlements with the state or to Ohio beneficiaries.
“I cannot tell you why,” Hopcraft said. “All I know is, this is what we did and this is what the facts are. Draw the conclusions you like.”
Hopcraft said Ohio has participated in nearly all of the settlements and is an “active and respected” member of the National Association of Insurance Commissioners (NAIC).
“The Ohio Department of Insurance has not tracked the amounts paid or number of Ohio residents who have received payment from the settlement with insurance companies,” he said in a written statement. “The department is mindful that the companies involved did not violate Ohio law in this matter, and has let the issue find its resolution through the effort led by Pennsylvania and Florida as lead negotiators.”
Taylor, through a spokesman, declined to speak about the settlements.
The settlement amounts were based on the value of each company’s total premiums written on policies purchased in that state. The money received by Ohio was placed in the state’s General Fund.
Nationwide settles
One of the national settlements involved the Columbus-based Nationwide Mutual Insurance Company, which employs 14,800 people in the state and is Ohio’s 13th largest employer.
In an October 2012 press release announcing the settlement, then Florida Insurance Commissioner Kevin McCarty said Nationwide had identified 4,747 unclaimed death benefits since the investigation began, and paid $144.1 million to beneficiaries. The agreement also required payment of $7.2 million to the states.
As part of the settlement, Nationwide agreed to begin monthly checks against the Death Master File of its life and annuity insurance files, and to develop a procedure for a “thorough search” for beneficiaries within 120 days of an insured’s death.
When Nationwide locates a beneficiary, it is required to provide the appropriate claim forms or instructions to assist the beneficiary in making a claim, a release from the Florida insurance office said. For a period of 36 months, Nationwide had to provide to the lead states quarterly reports about the implementation and execution of the requirements of the agreement.
Nationwide, in a prepared statement, said it employs more than 50 people dedicated to life insurance and annuity claims, 12 of whom are assigned to track down beneficiaries of unclaimed life insurance and annuity contracts.
“Last year, Nationwide paid more than 15,000 beneficiaries for all life insurance and annuity claims, including those who were found through our use of the Death Master File for unclaimed life insurance and annuity contracts,” the statement said.
Efforts to track down beneficiaries include searching public records, scanning obituaries and census records, and contacting staff members of cemeteries, the company says.
“As a result, beneficiaries have paid for a child’s education, purchased headstones for family members and even purchased first homes using previously unknown life insurance proceeds,” Nationwide said.
‘I see your point’
State Sen. Bob Hackett, R-London, who chaired the House Insurance Committee during the time period of the investigations and also works as an investment advisor and insurance planner, acknowledged that a lack of publicity has created a potential for beneficiaries not getting paid.
“You are right; I see your point,” he told a reporter from this newspaper. “I want the consumer protected.”
Some have argued for a change in law that would hold insurers more accountable.
The NAIC is working on model legislation that could serve as a template for states, but no final document has been produced.
“We are prepared to look at that and decide how to move forward, and what if anything we will advocate to the legislature,” Hopcraft said.
Ohio Rep. Michael Henne, R-Clayton, who serves on the House Insurance Committee and owns an Englewood insurance agency, said the state should re-examine the process to ensure beneficiaries are getting what they are owed.
Insurance carriers, he said, “do check databases, but they don’t send out a research team or have private investigators to check it out, but they do check databases to find a matchup with their records.”
It can be a complicated matter at times, he said.
“A lot of times the contact information is out of date and it’s a problem. Nobody has broken the law, but it is something we have to look at.”
He added: “We have to make sure the bad players are playing by the rules.”
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