State treasurer takes up fight to make sure life insurance benefits paid

In the wake of a contentious “60 Minutes” report, the treasurer says her department will redouble efforts to audit some companies not in compliance with unclaimed property laws

Insurance News

By Lyle Adriano

After a recent critical feature on the CBS news program 60 Minutes, Maine’s deputy state treasurer is leading efforts to ensure that unpaid life insurance benefits are properly settled.

The 60 Minutes spot revealed that a number of insurance companies feel obliged to pay for life insurance benefits only when a claim has been filed. Millions of policies have gone unpaid due to this practice, according to the news feature, and several states have challenged such actions.

Following the news feature, 25 insurance companies agreed to pay over $7.5 billion in back benefits in a series of settlements reached with the states with grievances—of which Maine is part of. Thirty-five companies refused to enter settlements.

"We have signed on to a couple of settlements that were the result of audits that we were a part of on a national scale, and we have received payouts from them," said deputy state treasurer Kristi Carlow.

Carlow said that her department takes part in audits to make sure that companies are complying with national unclaimed property laws, as well as paying benefits when they receive a notice of death. According to her, the audits occasionally reveal that the benefits were not paid.

"Let's say for example they can't find the beneficiary, but they know that someone has died, then three years after that obligation to pay came about, if they're still holding it they're required to sent it to the state treasurer's office for the unclaimed property program," she remarked.

She also noted that not all insurers are cooperative enough to send over the delayed benefits, still clinging to the practice of “no-claims-no-benefits,” and that there are states like Maine that do not require insurers to search through the  Social Security Administration's "Master Death File" to check for any policyholders.

"Insurance regulators in Maine and across the country have grown increasingly concerned that even when the insurance company has knowledge of the death of a policy holder, they are not contacting the beneficiaries," Maine Bureau of Insurance Doug Dunbar said.

The National Association of Insurance Commissioners is drafting a model law requiring all insurers to use the Death Master File database to identify deceased policyholders.
 

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