Pacific Life, Guardian Life to Pay Combined $4.45 Million to States in Death Master File Settlement
March 23, 2015 by Thomas Harman, associate editor, BestWeek: Tom.Harman@ambest.com
SACRAMENTO, Calif. – Guardian Life and Pacific Life will pay states $4.45 million and agree to reform business practices after reaching settlement agreements following an investigation by states over the companies’ use of the Social Security Administration’s Death Master File database.
The market investigations begun in 2009 targeted 40 companies and investigations on 20 of those have been completed, according to the Florida Office of Insurance Regulation. The latest agreement brings the total of companies that have reached settlements to 18.
Insurance commissioners for California, North Dakota, Florida, Illinois, New Hampshire and Pennsylvania, are leading the national investigation of life insurers to ensure compliance with California’s Unfair Insurance Practices Act and similar laws elsewhere. California and New Hampshire led the market conduct examinations of Pacific Life and Guardian Life respectively, each with aid from the other lead states.
Guardian Life will pay $2 million to regulators nationwide, while Pacific Life will pay $2.45 million. The companies have agreed to compare their records against the Death Master File to identify policyholders reported as deceased and conduct thorough searches for beneficiaries. Those beneficiaries, who may have been unaware of this insurance, can then submit a claim and collect benefits.
A statement from California Insurance Commissioner Dave Jones said many life insurers used the Death Master File database only to benefit the insurance company, by identifying only deceased annuitants to stop annuity payments, but not to pay life insurance benefits. An ongoing national investigation has resulted in settlements obtained by state insurance commissioners that have resulted in life insurers returning more than $1 billion to beneficiaries. To date, nearly 70% of the life insurance market by premium volume has either agreed to comply with the law through settlements or been found in compliance, Jones’ statement said.
“Guardian Life and Pacific Life have, by entering into these settlements, done right by consumers in New Hampshire and elsewhere, who will receive the benefits owed to them,” said New Hampshire Insurance Commissioner Roger Sevigny in a statement. Sevigny said his state’s portion would be sent to the General Fund.
The companies have agreed to compare all company records against the Death Master File to determine whether there are unclaimed death benefits, search for those beneficiaries, and otherwise remit unclaimed proceeds to the appropriate state authority, the OIR said in a statement. Florida will receive $342,283 as its share of the settlement payment, which covers investigation costs and future compliance monitoring.
Pacific Life was already revising its business practices with regard to the Death Master File prior to the start of its state exam, it said in a statement. “As a result, for its individual life insurance block, Pacific Life found over 200 prior unreported deaths, some going back almost 40 years, and has paid out close to $6 million in death benefits to either the intended beneficiaries, or escheated unclaimed amounts to the states.” Since 2012, Pacific Life has been comparing all company annuity and life insurance records against the Death Master File to find unclaimed benefits and searches for beneficiaries, the statement said.
Guardian issued a brief statement saying the company “is pleased with the resolution and committed to seeing that policy proceeds are properly distributed.”
Most recently, Midland National Life Insurance Co. agreed to pay $1.3 million as part of a new settlement with the California Department of Insurance and to reform its business practices after an investigation showed the company was misleading senior citizens when selling annuities deemed appropriate (Best’s News Service, Feb. 5, 2015).
Guardian Life Insurance Company of America has a current Best’s Financial Strength Rating of A++ (Superior). Pacific Life and Annuity Co. has a current Best’s Financial Strength Rating of A+ (Superior).
