MetLife Inc. (MET) and Prudential Financial Inc. (PRU) are among 10 life insurers facing an investigation by California regulators amid allegations that the firms failed to pay benefits after learning that insured people had died.
The investigation is being led by California Insurance Commissioner Dave Jones and Controller John Chiang, Jones said yesterday in an e-mailed statement. The probe focuses on whether life insurers use a database of death records to stop annuity payments, without using that same data to identify life insurance policyholders who have died.
“Insurance regulators and state controllers across the country are examining life insurance companies to understand whether they are using information they have that indicates a policyholder has died and whether they are paying out benefits appropriately,” Jones said in the statement. “Initial information from publicly available sources suggests some troubling practices in this area.”
The National Association of Insurance Commissioners, the organization of state regulators, said last week it had formed a national task force, led by Florida, to help coordinate investigations into whether companies failed to pay benefits to beneficiaries of life insurance policies. The probe was announced at a hearing yesterday looking into MetLife’s practices.
Todd Katz, executive vice president of insurance products at New York-based MetLife, said in a statement that the firm is “constantly looking to improve” its processes and “welcomes” regulators’ input. MetLife is “ready to work with them to give regulators comfort that our processes for handling unclaimed property are not only adequate, but excellent,” he said.
Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential, said in a telephone interview that the company will “cooperate fully” with any investigation and declined further comment.
Jones’s statement identified the other insurers being investigated as: Manulife Financial Corp. (MFC)’s John Hancock Insurance; Nationwide Mutual Insurance Co.; Hartford Financial Services Group Inc. (HIG); Sun Life Financial Inc. (SLF); Lincoln National Corp. (LNC); New York Life Insurance Co.; Pacific Life Insurance Co.; and Aegon NV (AGN), including Transamerica.
Insurance companies and their representatives deny that they move slowly to identify dead policyholders.
“These allegations are unfounded and contrary to life insurance companies’ long-standing business practices,” the American Council of Life Insurers, a trade group, said in a statement earlier this month.
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