U.S. Insurers Will Tell Regulators Retained Benefits Help Beneficiaries
A trade group representing U.S. life insurers will tell state regulators that beneficiaries are helped when death benefits are retained in corporate accounts.
The accounts, “allow grieving beneficiaries to make financial decisions at the time they choose to make them, while providing interest income that compares favorably with many other on-demand deposits” said Paul Graham, senior vice president of insurance regulation for the American Council of Life Insurers.
The accounts are reliable and checkbooks issued to beneficiaries provide access to cash as quickly as bank checks, he said in prepared remarks to the National Association of Insurance Commissioners at a meeting in Seattle today.
Regulators are under pressure to change industry practices after Bloomberg Markets reported last month that carriers profit by holding and investing $28 billion owed to beneficiaries. The NAIC on Aug. 6 assigned a group of regulators to review the practice, and today the panel is set to discuss the accounts, which aren’t insured by the Federal Deposit Insurance Corp.
Executives from the two largest U.S. life insurers, MetLife Inc. and Prudential Financial Inc., are scheduled to testify. Graham said the industry group will cooperate with regulators examining the accounts and setting disclosure requirements.