State insurance regulators have reached settlement agreements with Hartford Fire & Casualty Group, Securian, Great American Life, and Standard related to use of the Social Security Administration's Death Master File database.
Hartford will pay $2.1 million, Securian $625,000, Great American Life $400,000, and Standard $277,000 to the states participating in the national investigation. All four insurers agreed to reform their business practices to use the database to search for policyholder beneficiaries who might be owed benefits from a life insurance policy.
“These four insurers have agreed to do the right thing for consumers and to use the Death Master File to determine if a life insurance policyholder died and then to pay benefits,” said California Commissioner Dave Jones. “I urge other life insurers to follow the lead of the 24 life insurers who have entered into regulatory settlement agreements to use the Death Master File to identify deceased policyholders and pay benefits to their beneficiaries.”
The Death Master File provides insurers with the names of deceased people in the United States who have Social Security numbers. Until recently, a number of life insurers used the Death Master File to identify deceased annuity holders in order to stop making annuity payments but not to pay life insurance benefits.
The four insurers that just settled with the states agreed to compare all company records against the Death Master database to determine whether there are unclaimed death benefits and conduct a thorough search for beneficiaries to whom unclaimed benefits may be owed.
In addition to the four settlement agreements, a recent multistate market conduct exam of Primerica showed the insurer has properly used the Death Master File symmetrically across all product lines to ensure the company is identifying deceased life insurance policyholders whose beneficiaries are owed life insurance proceeds.
Settlements with state insurance commissioners have led to life insurers returning more than $6 billion to beneficiaries nationwide and over $2.8 billion delivered to states' unclaimed property programs, which continue efforts to locate and pay beneficiaries.
A model law that would require all life insurers to use the Death Master File to identify deceased policyholders in order to facilitate payment of benefits to their beneficiaries is now being considered for adoption by the National Association of Insurance Commissioners.
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Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].