Insurance Commissioner Dave Jones Announces Settlement In Death Master Investigation
News: 2012 Press Release
Insurance Commissioner Dave Jones today announced that the California Department of Insurance has negotiated a multi-million dollar settlement with MetLife, Inc. (MetLife). The insurance departments of Illinois, Florida, New Hampshire, North Dakota, and Pennsylvania joined in the negotiation.
MetLife has agreed to strict business reforms to ensure it quickly pays out life insurance benefits. The company will also pay $40 million to state insurance departments. California's share of the settlement has not yet been determined but is expected to be approximately $3.5 million. The agreement was developed in tandem with an agreement by California State Controller John Chiang. That agreement is expected to deliver millions of dollars in death benefits to state controllers' offices, who will then seek to find the beneficiaries and pay them their benefits.
"The settlement I am announcing today represents an important victory for consumers," said Commissioner Jones. "For many years, MetLife selectively used the Social Security Administration's Death Master File database to cut off payments to annuity holders but did not use that database to identify deceased life insurance policyholders and pay their beneficiaries. Under today's settlement, that practice will end. I hope other life insurers will follow MetLife's lead and enter into similar agreements."
The settlement requires MetLife to run the Social Security Death Master File or similar database monthly to determine whether its life insurance policyholders, annuity owners, and holders of retained asset accounts (accounts holding insurance benefits paid to beneficiaries) have died. If MetLife learns that a policyholder died, it must conduct a thorough search for beneficiaries, using contact information in its records and online search and locator tools. If MetLife does not find a beneficiary within a year of learning of a death, it must transfer the benefit to the appropriate state controller as unclaimed property.
The business reforms to which MetLife agreed end MetLife's decades-long practice of improperly holding onto life insurance benefits that should be paid to its customers' survivors and loved ones. It is expected that millions of dollars more per year will be put into the hands of beneficiaries that otherwise would have remained in MetLife's coffers.
This settlement represents the culmination of a year-long investigation by Commissioner Jones and other state insurance regulators into MetLife's practices. In May 2011, Commissioner Jones held an investigatory hearing on MetLife's practices, in which he was joined by Controller Chiang and representatives of the Florida and Minnesota departments of insurance. Following that hearing, Commissioner Jones joined forces with the insurance departments of Illinois, which acted as managing lead state, and Pennsylvania, Florida, New Hampshire and North Dakota to further investigate MetLife.
Commissioner Jones, in coordination with the other states, achieved a similar settlement agreement with Prudential Life Insurance Company earlier this year. In that agreement, Prudential agreed to similar business reforms and paid $17 million to state insurance departments. California's share was more than $1.5 million. Fifty-one insurance departments signed that agreement.
Today's settlement becomes effective when 14 additional state insurance departments sign.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $259 billion in premiums annually in California. In 2014 the California Department of Insurance received more than 175,000 calls from consumers and helped recover over $54 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.