Settlement Reached In Death Master Investigation
News: 2012 Press Release
SACRAMENTO, Calif. - Insurance Commissioner Dave Jones announced today that the California Department of Insurance has negotiated a multi-million dollar settlement with John Hancock Life Insurance Company (U.S.A.) and John Hancock Life and Health Insurance Company along with the state insurance departments of Illinois, New Hampshire, North Dakota, Pennsylvania and Michigan.
The John Hancock companies have agreed to business reforms that will ensure they perform thorough searches to pay out life insurance, annuity, and retained asset account benefits to consumers. John Hancock companies will also pay $13.3 million to the states. California's share of the settlement is expected to be approximately $1.8 million.
In 2011, the John Hancock companies were the first life insurers to agree to turn over to state unclaimed property officials, including California State Controller John Chiang, their unclaimed life insurance, annuity, and retained asset account benefits that were held past state escheatment deadlines, so that unclaimed property officials could search for beneficiaries. The John Hancock companies also agreed to some prospective business reforms. But Insurance Commissioner Jones, along with other state insurance regulators, determined further insurance reforms were necessary to make sure the companies were using the Death Master File promptly to identify deceased insureds, and thoroughly searching for their beneficiaries before turning over funds to unclaimed property officials.
"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, the John Hancock companies selectively used the database to cut off payments to annuity holders, but did not use the database to identify deceased life insurance insureds and pay their beneficiaries. This settlement includes important reforms. I want to acknowledge the John Hancock companies' role in changing their business practices and settling this case. Regrettably, while we hoped that other companies would come forward voluntarily to settle, it appears enforcement actions are necessary to ensure other life insurers reform their business practices."
The settlement requires the John Hancock companies to run the Social Security Death Master File or similar databases monthly to determine whether their life insurance insureds, annuity owners, and holders of retained asset accounts (accounts holding insurance benefits paid to beneficiaries) have died. The Death Master file is a database containing the names and contact information for persons who have died in the United States, which life insurers purchased from the Social Security Administration. If a John Hancock company 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 the company does not find a beneficiary, it must transfer the benefit to the appropriate unclaimed property official as required by law.
Commissioner Jones, in coordination with the other lead state insurance regulators, achieved similar settlement agreements with Prudential Life Insurance Company, MetLife, Nationwide and AIG. In those settlements, the insurers agreed to similar business reforms. Those insurers have agreed to pay over $75 million to participating states. California's share of those settlements is expected to be over $7 million.
Today's settlement is 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 2015 the California Department of Insurance received more than 155,000 calls from consumers and helped recover over $84 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.