Last year, nine insurance companies were subpoenaed as part of an investigation being done by several states. The investigation had to do with how the insurance industry was handling unclaimed life insurance benefits. This week, Prudential signed a settlement with the Insurance Regulators.
It all started in 2011. There were questions about how some insurance companies were handling the money that came from the death benefit of life insurance policies. When a policyholder dies, the death benefit is supposed to go to the person that the policyholder selected as his or her beneficiary. The insurance company is supposed to put in the effort required to find that beneficiary, and make that payment.
If the insurance company cannot locate the beneficiary, even after using the Social Security Death Master Database, then the beneficiary money officially becomes “abandoned property”. The insurance company is supposed to turn that money over to the state. They are not allowed to keep it in their company’s bank account.
Several insurance companies were targeted in an investigation. California, Florida, Illinois, New Hampshire, North Dakota, Pennsylvania, and New Jersey, started an investigation.
The specific insurance companies that were investigated were: 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.
Prudential Insurance Co. of America was not among the companies being investigated. This insurer has not been accused of any wrongdoing. Even so, the insurer signed a settlement with the Department of Insurance and with Insurance regulators from the states involved in the investigation.
Prudential has agreed to use enhanced research techniques to find beneficiaries of life insurance policies. It promised to expand the matching criteria it uses to check a Social Security master list of deceased people. It will have the computer program look for transposed letters and numbers. Those accidental errors could be what has caused beneficiaries to be overlooked in the past.
The settlement that Prudential has agreed to requires the insurer to pay the seven states $17 million. That money is going to be used by the states to monitor insurance companies, in order to make sure that they are complying with the regulations. It is hoped that Prudential’s decision to reach a settlement with the seven states will encourage other insurers to do the same.
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