Nine insurance companies were subpoenaed as part of an investigation in New York regarding the way these companies handled what is being called “abandoned property”. The purpose of the probe is to discover if the insurance companies are doing enough to find beneficiaries of life insurance policies.
New York is one of thirty-five states that are questioning whether the insurance industry is actually doing what it is supposed to in regards to unclaimed life insurance benefits. This probe has been going on for several months now.
When a person purchases a life insurance policy, that person is allowed to select a beneficiary. When the person dies, the insurance company is supposed to send the death benefit money to that beneficiary. This is how things are supposed to work, and how they do work in many cases.
However, there have been several instances where things just didn’t go that way. An insurance company is required to put in the necessary effort in order to locate the beneficiary. If they still cannot find the beneficiary after a certain amount of time, the money that would have gone to the beneficiary officially becomes “abandoned property”. The insurance company is then required to send that money to the state. They are not allowed to keep the money in their bank accounts.
It seems that some insurance companies are not following the rules, and have instead been keeping money that they were not supposed to be keeping. Now, nine insurance companies have been subpoenaed. The purpose is to force the insurance companies that the probe has been investigating to hand over documents, (and other information), that relates to that particular company’s procedures for handling funds that have become abandoned property.
The nine insurance companies that have been subpoenaed by New York are: MetLife Inc., Genworth Financial Inc., AXA Equitable Funds Management Group LLC, The Guardian Life Insurance Co. of America, John Hancock Insurance Agency Inc., MassMutual Asset Finance LLC, New York Life LLC, Prudential Insurance Agency LLC, and TIAA-CREF Insurance Agency LLC.
It is possible that New York State could invoke the Martin Act. That statute does not require proof of intent to defraud. If I am understanding correctly, then this means that the insurance companies couldn’t avoid consequences simply by saying that they didn’t mean to commit fraud.
Image by Thom C on Flickr