Insurance commissioners from across the country grilled executives from Nationwide and MetLife Thursday in Tallahassee on their life insurance business practices.
In particular, regulators pressed the companies to explain why they aggressively examine death records when seeking to stop annuity payments, but are less vigilant when it means they have to pay claims to beneficiaries. They also wanted to know why the companies take so long to hand over unclaimed benefits to states.
Florida insurance commissioner Kevin McCarty, president-elect of the National Association of Insurance Commissioners, led the daylong hearing, which drew colleagues from more than a dozen states. The hearing was part of a national effort targeting multiple insurance companies.
The companies pledged to do better. Todd Katz, executive vice president of MetLife, told the panel his company began using a Social Security "death master file" regularly in the mid '90s to make sure they weren't paying into annuities after someone had died. That check is done monthly.
It didn't start using the file to find beneficiaries of life insurance policies until nearly 10 years later, and even then it was only used occasionally.
In late 2010, after discussions with regulators, MetLife decided to run the file against life insurance policies at least once a year.
"We're always looking to continue to get better," Katz said. "We want to work with you to make that happen."
Katz said that after a massive data run in 2007 the company determined the death file provided a useful "safety net" for people who might not know they are entitled to life insurance benefits.
At the time, the company discovered $83 million in unclaimed benefits. About $51 million has been paid out to claimants.
Katz noted the unclaimed benefits represented only .2 percent of the $44 billion paid out by MetLife over the years, underscoring that most beneficiaries contact the company to collect.
Uncollected claims, he said, will be turned over to states after a five-year "dormancy" period.
The money is useful to states, which can spend it and use other funding sources to pay claimants seeking to collect benefits.
Eric Henderson, senior vice president of Nationwide, said his company also started an annual check of the death master file for individual life insurance policies in 2010.
A run of 1 million policies uncovered about 1,000 with unclaimed benefits. The company was able to find all but 263 claimants across the country, with 17 of those in Florida.
As for turning over unclaimed property to states, Henderson said he believes regulations and contracts may need to be revisited to speed the process.
The hearing came the day after Florida officials announced a settlement with John Hancock Life Insurance Company, with the company agreeing to revise its business practices related to unclaimed property for life insurance products.
Janet Zink can be reached at firstname.lastname@example.org or (850) 224-7263.