Business

Regulators Help Finalize $500 Million Multistate Settlement with MetLife Insurance

By: Jim Turner | Posted: April 24, 2012 3:55 AM
MetLife Inc. may have to pay up to $500 million over its handling of death benefits from life insurance policies issued decades ago.

The deal, part of a multistate probe headed by Florida insurance investigators, also requires MetLife to improve its system for identifying unclaimed life-insurance policies.

Kevin McCarty

Florida Insurance Commissioner Kevin McCarty | Credit: floir.com

“For many years a number of insurance companies have selectively used the Social Security 'Death Master' file to cut off payments to annuity holders, but did not use that same database to identify deceased life-insurance policyholders to initiate payment of claims,” said Florida Insurance Commissioner Kevin McCarty in a conference call on Monday.

In its statement Monday, MetLife said it paid about $12 billion in death benefits in 2011 and its records indicate that more than 99 percent of death-benefit claims "are submitted by beneficiaries and routinely paid in a timely and accurate manner."

The settlement involves approximately 708,000 policies nationwide issued between 1900 and 1963.

There were at least 15,000 Industrial Life policies -- typically covering burial expenses that were once sold in weekly, monthly or quarterly bases by door-to-door salesmen -- involving Floridians, with a face value of $9 million. 

There was no breakdown of the nonindustrial policies, which may account for $100 million to $200 million of the settlement.

The “Death Master” file is supposed to be used by insurance companies to check on names of people that recently died.

McCarty said the landmark settlement may be the largest settlement in terms of returning money to consumers.

MetLife, the nation's biggest life insurer by assets, now joins Manulife Financial Corp.’s John Hancock division and Prudential Financial Inc. in settling disputes over the use of the deceased customers' benefits.
 
“We think the settlement today, along with the Prudential settlement, which was also a local settlement, and the settlement that Florida entered into with John Hancock, these will all encourage companies to settle this,” McCarty said.

John Hancock, which like MetLife has denied wrongdoing, agreed to pay $3 million to Florida. Prudential agreed to pay $17 million nationally.

MetLife will also pay $40 million to the states for the cost of their investigation.

"Life insurance companies must do their due diligence to locate beneficiaries and pay them the amount agreed upon between the company and the policyholder,” Attorney General Pam Bondi stated in a release.

The agreement is the result of a joint investigation undertaken with insurance departments of Illinois, California, Pennsylvania, New Hampshire and North Dakota.

At least 20 states must sign the agreement. States have until June 29 to sign the agreement to become eligible to receive the settlement distribution.

“This settlement with MetLife is another important step in correcting a longstanding practice within life insurance companies that was not in the best interest of their customers,” Florida CFO Jeff Atwater stated in a release.  

MetLife will have to pay the full value of any account along with 3 percent interest.

Policies issued after 1940 have Social Security numbers, while policies issued prior to 1940 relied more on date of death.

As part of the agreement, MetLife agreed to:
  • Adopt business reforms strengthening efforts to locate policyholders and beneficiaries within 120 days of an insured person’s death.
  • Conduct quarterly matches for a year, and then monthly matches against the Death Master file to check for evidence that a person insured by Metlife may have died. If a match is found, the company will conduct a “thorough search” for the insured or beneficiaries using databases, mail, telephone calls and email (if available).
  • If, within one year, an insured or beneficiary cannot be found, MetLife will report and pay the death benefit or annuity payment to the appropriate unclaimed property department.
  • MetLife also agreed to search for insured persons or beneficiaries of low-value or industrial life insurance policies that were sold in the early 1900s up to 1964. Many of these policies were sold in Florida. MetLife is making extra efforts to gather information needed to identify these insureds. The industrial policies alone are estimated to include almost 15,000 Florida policyholders with over $9 million in face value. The face value for national industrial life policies is expected to exceed $400 million.
Consumers can access more information about the MetLife, Prudential or John Hancock settlement agreements by accessing the DFS Division of Consumer Services’ webpage at: http://www.myfloridacfo.com/consumers/ or the office’s webpage regarding the Life Claims Settlement issue.

To search for or claim unclaimed property, visit www.FLTreasureHunt.org, or call 1-88-VALUABLE or (850) 413-3089.



Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.

Comments (3)

Darline spencer
12:24AM AUG 4TH 2013
John Hancock paying three million is an insult and Jeff Atwater was paid to accept such an insulting offer. John Hancock has not been paying out policies dating back before the 20th century and they think 3 million is an accurate settlement! They need to investigate Jeff Atwater along with John Hancock representatives for financial fraud, identity theft, insurance fraud and blatant theft! They never honored my grandfathers clain in Boston and nothings been done about it. What a disgrace. Jeff Atwater and his office handles all the unclaimed accounts at the treasury in Florida and was happy to take all my credential but then turn around after 2 different submissions of my documents and say that I was not the rightful owner of those claims. Guess all he wanted was my documents and signatures so he could steal from me along with John Hancocks help.
Robert Lloyd
7:57AM APR 24TH 2012
So companies now have to babysit beneficiaries and spend money to get them to collect on the individuals policies? Isn't there any responsibility left in this world for an individual?

Everyone is a victim. "Poor me, please feel sorry for me, help, I'm helpless, I'm hopeless"... this whole thing stinks.
Darline spencer
12:32AM AUG 4TH 2013
Mr. Lloyd you are a true a..hole. You have failed to look at the bigger picture. I suspect you are one of many in the industry who has stolen from innocent citizens. Yes, victims of circumstance. The insurance companies have a judicial responsibility to follow through on contracts (life Insurance policies) and are ultimately the "agent" responsible for insuring families get what is left to them. That is why it is called insurance. Mos individuals do not discuss their fiances with their loved ones so when they pass most times it is unknown what has been to insure their loved ones are taken care of. So cut the crap. We are all accountable for our actions but as an industry whose sole purpose is to serve the beneficiaries and policy holders, they have failed drastically and betrayed the trust of millions who have passed away. This is a disgrace.

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