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CA Department of Insurance

Insurance Commissioner Dave Jones Announces Settlement in Death Master Investigation

News: 2012 Press Release

For Release: October 11, 2012
Media Calls Only: 916-492-3566
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Insurance Commissioner Dave Jones Announces Settlement in Death Master Investigation
Nationwide Agrees to Multi-Million Payment and Important Business Reforms

Insurance Commissioner Dave Jones today announced that the California Department of Insurance has negotiated a multi-million dollar settlement with Nationwide Financial Services, Inc., along with the insurance departments of Florida, Illinois, New Hampshire, North Dakota, Pennsylvania and Ohio.

The Nationwide companies, including Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company, who are also named in the settlement, have agreed to business reforms that will ensure that it rapidly pays out life insurance, annuity, and retained asset account benefits. The company will also pay $7.2 million to state insurance departments. California's share of the settlement has not yet been determined but is expected to be approximately $750,000.

This agreement was developed in tandem with an agreement by California State Controller John Chiang to collect from Nationwide, life insurance, annuity, and retained asset account benefits that have become unclaimed property.

"This settlement is another important step in our effort to reform industry practices regarding the use of the Social Security Death Master File database," said Commissioner Jones. "As other insurers have done, Nationwide selectively used the 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. This settlement ends that practice. I strongly encourage other insurers to come forward and enter similar agreements. Beneficiaries of deceased policyholders should receive their payments immediately."

The settlement requires Nationwide 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 Nationwide 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 Nationwide does not find a beneficiary, it must transfer the benefit to the appropriate state controller as unclaimed property.

Commissioner Jones, in coordination with the other states, achieved similar settlement agreements with Prudential Life Insurance Company and MetLife. In those agreements, the insurers agreed to similar business reforms. Prudential paid $17 million to state insurance departments and MetLife paid $40 million. California's share of the two settlements was $1.6 million and close to $4 million, respectively.

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 $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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