Three life insurance companies have settled with the Minnesota Department of Commerce over unpaid claims. A total of 16 companies were identified in a market conduct assessment several years ago for failing to pay policy beneficiaries after the expiry of insured customers—of which only nine so far have settled (including the recent three).
AXA Equitable Life Insurance, Jackson National Life Insurance and New York Life were the three companies that recently settled.
In total, the nine companies made $12.6 million in settlement payments to the state. Additionally, the nine companies have agreed to pay $143 million to their beneficiaries, with an additional $31 million owed to individuals who cannot be located (to be deposited in the state unclaimed property fund).
Insurance examiners from both inside and outside Minnesota conducted a market conduct assessment years ago. The study discovered that 16 insurers were referring to a "death master file" maintained by the U.S. Social Security Administration which allowed them to stop making annuity payments to customers who have perished.
Minnesota Commerce Commissioner Mike Rothman commented that the insurers failed to properly identify and contact the beneficiaries of their deceased customers, referring only to the death master file as basis for halting annuity payments.
"They made the argument that unless there was a claim they weren't obligated to pay," Rothman said. "We began an investigation. Under the settlements, these life insurance companies must honor their payment obligations to our consumers."
Rothman urged consumers to speak with their life insurance companies and ensure that the carriers have updated information on their customers and beneficiaries. He also called on life insurance policyholders to tell their beneficiaries that they are entitled to claims.
