VFW Demands `Full Disclosure' of Soldier Death-Benefits
July 28 (Bloomberg) -- David Evans talks with Bloomberg's Scarlet Fu about his investigation into retained-asset accounts by life insurers and how the insurers profit from these accounts at the expense of grieving families. (Source: Bloomberg)
A U.S. veterans organization with 2.1 million members is demanding “full disclosure” on death benefits that life insurers retain on behalf of deceased military personnel and invest to boost company returns.
“Reports about life insurance companies profiting off our war dead struck an emotional nerve at every level,” said Thomas J. Tradewell Sr., national commander of the Kansas City, Missouri-based Veterans of Foreign Wars, in a statement dated Aug. 4. “It may be a legal industry practice, but learning that a company is earning more interest than what they pay out to surviving families just reeks of corporate greed and irresponsibility.”
U.S. life insurers, a group led by MetLife Inc., have drawn criticism from state and national elected officials since Bloomberg Markets magazine reported last week that more than 100 carriers profit by holding and investing $28 billion owed to life insurance beneficiaries.
“We’re pushing for full disclosure,” Joe Davis, 54, a spokesman for the VFW in Washington, said today in a telephone interview. “These insurers are providing a valuable service, but what they didn’t disclose was that they are also making money off of it. That’s what stinks about this whole thing -- the fact that we didn’t know.”
New York Attorney General Andrew Cuomo opened a probe into the practice last week and the National Association of Insurance Commissioners, which is responsible for regulating the industry, said oversight must be improved. New York-based MetLife and No. 2 Prudential Financial Inc. in Newark, New Jersey, were among carriers subpoenaed by Cuomo.
The American Council of Life Insurers, an industry lobby group, said this week it was “very proud” of the practice because it gives the bereaved time to decide what to do with the money.
The New York State Insurance Department plans to review whether rules permit the retention of benefits. Defense Secretary Robert Gates has pledged to help the U.S. Department of Veterans Affairs investigate the practice on behalf of families of deceased military personnel.
U.S. Senators Charles Schumer, Democrat of New York, and Arizona Republican John McCain have criticized the practice. Representative Debbie Halvorson, an Illinois Democrat, introduced legislation last week requiring profit disclosure.
To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net.
Rate this Page