California Controller's Office Sues American National Insurance for Access to Financial Records
May 15, 2013 by Best's News Service
SACRAMENTO, Calif. – American National Insurance Co., a Texas-based life insurance company, is facing a lawsuit from the California State Controller’s Office that accuses the company of failing to turn over records needed for an audit of the company. American National is suspected of failing to pay life insurance benefits to the heirs of deceased policyholders, State Controller John Chiang said in a statement.
The Controller’s Office has requested a court order allowing the agency to conduct a “full, complete and timely” examination of all of American National’s books and other records it says are necessary to perform an audit.
The lawsuit, filed in Superior Court in Sacramento, also asks the court for damages and penalties due to the state, as well as attorney fees.
“In what appears to be a pervasive industry practice, many insurers are fleecing policyholders by warmly welcoming premiums, while turning a cold shoulder when the time comes to pay,” Chiang said in a statement. “While seven insurers, to date, have responsibly come forward to work out settlements with my office ensuring that families are made whole, ANICO continues to stonewall the basic legal requirement to open up their books.”
Efforts to reach American National for comment were not immediately successful.
The probe into American National is part of an investigation launched by Chiang in 2008 into insurance company payment practices. It is focusing on whether companies failed to pay death benefits to the beneficiaries of life insurance policies, despite having access to federal records indicating that policyholders had died. This information is contained in the Social Security Administration’s “Death Master File,” which lists information about all Social Security number holders who have died.
The question of how life insurers use information included in the Death Master File was at the center of a nationwide investigation that focused on allegations that life insurers used the database to identify annuity recipients but did not use the same database to find life insurance policyholders who had died and whose beneficiaries were owed settlements. Several life insurers have agreed to settle with state governments and insurance regulators over alleged long-overdue unpaid benefits (Best’s News Service, July 16, 2012).
Last month, Montana Gov. Steve Bullock signed a law requiring life insurers operating in the state to search the Death Master File twice a year for the names of policyholders who have died (Best’s News Service, April 2, 2013).
American National currently has a Best’s Financial Strength Rating of A (Excellent).
American National Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
BN-NJ-05-14-2013 1523 ET #