Multi-million dollar settlement reached in Lincoln National Death Master case
News: 2013 Press Release
SACRAMENTO, Calif.- Insurance Commissioner Dave Jones announced today that the California Department of Insurance has, with other state insurance regulators, reached a settlement with the Lincoln National group of insurers over the insurers' use of the Social Security Administration's Death Master File database. The settlement ensures protection for policyholders and beneficiaries.
"This agreement is another success in our nationwide effort to reform life insurance industry practices regarding the use of the Death Master database," said Commissioner Jones. "I have made a commitment to consumers and will ensure companies make good on their promises to their policyholders."
Lincoln National agreed to pay $12.6 million to insurance regulators in addition to agreeing to a number of business practice reforms, including using the Death Master File database to search its records for deceased life insurance policyholders so beneficiaries may be paid. Pennsylvania served as the lead state in this investigation, with support from Commissioner Jones and insurance regulators in Florida, Illinois, Indiana, New Hampshire and North Dakota.
Lincoln National holds roughly four percent of the national life insurance market, with over $21 billion in annual premiums. With this latest settlement, life insurers representing over 55 percent of the total national market have conformed or agreed to reform their business practices and use the Death Master File to search for deceased policyholders and make benefit payments.
For many years, life insurers have used the Death Master File to search for and stop payments to annuity holders, but did not use the database to identify deceased life insurance policyholders whose beneficiaries are owed life insurance proceeds. It is estimated that through this practice insurers avoided paying over a billion dollars in life insurance proceeds to beneficiaries.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 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 $394 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.