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CA Department of Insurance

"Death Master" Investigation Results in National Settlement With Major Life Insurer

News: 2012 Press Release

For Release: February 2, 2012
Media Calls Only: 916-492-3566
"Death Master" Investigation Results in National Settlement With Major Life Insurer
$17 million dollar multi-state agreement with Prudential Insurance Company

Insurance Commissioner Dave Jones today announced that the California Department of Insurance (CDI) has negotiated a multi-million dollar settlement, along with Florida, Illinois, New Hampshire, North Dakota, Pennsylvania and New Jersey, with Prudential Insurance Company (Prudential).

"Our Death Master investigation exposed life insurance companies' failure to pay benefits even though they had knowledge of policyholder deaths from the Death Master file - a database of deceased persons in the United States maintained by the Social Security Administration and rented to life insurers," said Commissioner Jones. "Prudential Life Insurance should be acknowledged for reaching this agreement, which requires that they use Death Master and all other means available to them to ensure that when life insurance policyholders die, their beneficiaries receive the benefits owed."

Commissioner Dave Jones is one of the leaders of the National Association of Insurance Commissioners (NAIC) Task Force on Life/Annuity Settlement Practices. The lead states (California, Florida, Illinois, New Hampshire, North Dakota, Pennsylvania, and New Jersey) have negotiated a regulatory settlement agreement with Prudential (including The Prudential Insurance Company of America, Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey, Prudential Retirement Insurance and Annuity Company, and Prudential Annuities Life Assurance Corporation).

The settlement agreement requires Prudential regularly to check the Social Security Death Master file to determine whether any of its life insurance policyholders, owners of annuities, and holders of retained asset account have died. If Prudential finds that a policyholder has died, the agreement requires Prudential to conduct a thorough search for beneficiaries, using all contact information in its records and online search and locator tools. If beneficiaries cannot be located, Prudential must turn the proceeds owed to beneficiaries over to the states as required by state unclaimed property laws.

The agreement requires Prudential to pay $17 million collectively to the states participating in the settlement. California's share of the settlement has not yet been determined, but is expected to be over $1 million. Benefits owed to beneficiaries will be paid once they have been located. Paid benefit amounts will be determined according to the terms of each individual policy.  

"This settlement is an important step in the efforts of the California Department of Insurance to ensure that beneficiaries promptly receive the benefits they are due when a relative or loved one dies," Commissioner Jones said. "I am hopeful this settlement will lead other life insurers to come forward and enter into similar agreements."

The agreement becomes effective after 20 states sign it. Currently, the seven lead states listed above have signed the agreement.  

This settlement comes after a joint investigative hearing last May held by Commissioner Dave Jones and State Controller John Chiang into the payment practices of death benefits by major life insurers.

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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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