Now it's AIG's turn to do right thing and pay up on death benefits for ignored policyholders
Wake up and good morning. Let the dominoes tumble. Recently it was Nationwide's turn to settle a multistate probe of the way it handles death benefits (read my recent column). Now it's AIG's turn. (AP photo, left.)
American International Group, which had to be rescued by the federal government during the recent recession, just agreed to pay $11 million to settle an investigation by insurance regulators from Florida and other states pushing insurers to clear their books of overdue life-insurance payments. AIG's is the 5th agreement that Florida has settled with big national insurers to more fairly use a big national database that records people's deaths -- known as the U.S. Social Security Death Master File.
Part of the concern is that insurers may ignore recorded deaths of policyholders deserving of payouts because no claims were ever filed on their behalf. That's supposedly an industry tradition. It seems lazy and self serving by the industry and obviously sparked this multistate inquiry.
A task force of insurance regulators believes insurers like AIG, Nationwide, MetLife, Prudential, John Hancock and others that already have settled failed to pay more than $1 billion in death benefits over the years. And the folks most harmed by this practice are moderate-to-low income families who do not have financial advisers or lawyers keeping track of their financial affairs. Read more from the Wall Street Journal here and the AP here.
Bottom line? AIG will now accelerate the payout of $300 million of unclaimed policies to state abandoned-property departments while promising to do a better job of hunting down beneficiaries of policyholders in the future.
-- Robert Trigaux, Business Columnist, Tampa Bay Times