2 life insurers settle over benefits

Cases part of effort to ensure beneficiaries get what they’re owed.

More than $10 billion in life insurance benefits have gone unclaimed in recent years, regulators say. And the darndest memory problems at insurance companies seemed to keep popping up.

Some insurance companies managed to check death rolls quietly but quite efficiently to stop payments to consumers on investments such as annuities, an investigation spearheaded by Florida officials found. But then oops, it slipped their minds to look very hard for beneficiaries who might not know they were named in life insurance policies.

Settlements with two insurers announced recently highlight continuing efforts by regulators to help make sure beneficiaries get what they are due.

The announcement comes in the sixth year of a multistate national effort that has returned more than $8.7 billion in proceeds directly to beneficiaries, and sent more than $3.25 billion to the states, where unclaimed-property programs continue efforts to find and pay beneficiaries, officials said.

Settlements have been reached with Aflac for $350,000 and State Farm for $250,000, regulators said Dec. 21.

Neither company admitted wrongdoing in the settlements, which mean 30 of the top 40 companies have now reached deals or seen investigations concluded on the issue. Previous agreements have sometimes involved much larger sums. Insurer AIG, for example, agreed to make available $25 million in unclaimed life insurance benefits in Florida in 2013.

An investigation by Florida insurance officials in 2009 found “companies were using information from the Social Security Administration’s Death Master File to stop paying a deceased person’s annuity, but not using it to search for beneficiaries of a life insurance policy and initiate an investigation as to whether benefits were due.”

Florida’s share of the settlements with the two companies is about $42,000, according to the Florida Office of Insurance Regulation, the state’s Department of Financial Services and the Attorney General’s Office.

In statements, the companies emphasized long-running efforts to address the issue.

“Since 2012, Aflac has incorporated the Social Security Administration’s Death Master File to identify individuals who might otherwise be unaware that they are eligible for benefits,” said Jon A. Sullivan, director of corporate communications.

“The DMF has become a useful resource as it enables us to better serve our policyholders and facilitate our goal, which is to deliver needed benefits during difficult times.”

A statement from State Farm said the company began to review the issue eight years ago and “this effort helped us locate and provide policy benefits to beneficiaries in advance of statutory changes and the requirements of this settlement.”

The settlement included payment for examination, compliance, and monitoring costs, a spokesman noted.