In another good news story, insurance giant MetLife, the largest life insurer in America, agreed to pay almost $500 million in a multi-state settlement deal after regulators reviewed whether companies were holding onto funds that should go to beneficiaries. This builds on a previous multi-state settlement with the US’s second biggest life insurer, Prudential, a few months ago (see blog post on that settlement here. Another settlement was reached with Toronto-based John Hancock.
With life insurance, the company is required to pay out the claim after receiving notification of the policyholder’s death and a valid death certificate. If there is no notification, then they are usually required to hold the funds until the policyholder would be 100 years old, plus an additional three to five years depending on the state, before turning the money over to the state as unclaimed property. The main allegation in these cases is that the insurance companies are not doing this, and are not taking the proper steps to track down beneficiaries, such as using Social Security databases to compare to their own records. MetLife maintains they pay more than 99 percent of life insurance claims and are working with regulators to ensure every claim gets paid.
An audit of MetLife launched in 2008 found that for two decades the company failed to pay benefits to beneficiaries or the state after a policyholder died. California Controller John Chiang said a joint investigative hearing with California Insurance Commissioner Dave Jones held last May revealed MetLife had information about the deaths of some of its life insurance policyholders but failed to pay what was owned. He went on to say, “These settlements make it clear that if the industry isn’t willing to make the payments legally required, we will take action, including lawsuits, to compel them to do right by their customers.”
As California insurance attorneys, we have been following these big investigations and multi-state settlements. States like California and Florida have led the way, with regulators scrutinizing these companies’ business practices. This most recent one with MetLife will likely see $40 million going to about 30,000 Californians, according to Mr. Chiang. The average cash value of each claim is about $1,200. Other states involved are Florida, Illinois, and Pennsylvania. MetLife also agreed to pay out about $188 million to beneficiaries across the country this year. Within the next 17 years is expected to pay as much as $438 million. Between the three companies that have settled, it is expected the combined payout will exceed $1 billion, although over several years.
Our San Francisco insurance attorneys know that these large multi-state settlements are a great step towards fairness for insurance consumers, especially by incentivizing these giant companies to behave correctly and follow fair, honest and transparent business practices. But these suits are not for individual policyholders who have been tricked or cheated by insurance companies. If a loved one has died, and you are unsure of whether there was a life insurance policy or what to do about it, contact an experienced insurance claim lawyer in San Francisco.
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