Feb 2 (Reuters) - Prudential Financial, the second-largest life insurer in the United States, has reached a $17 million multi-state settlement on death benefits that resolves a controversy over unpaid insurance claims.
The settlement comes after a joint investigative hearing last May held by California’s insurance commissioner, Dave Jones, and state controller John Chiang into the payment practices of death benefits by major life insurers.
Life insurance companies have been under pressure from state regulators for years over their use of the so-called death master file, a Social Security database that records deaths, amid questions about how far they went to confirm that policyholders had died and beneficiaries were due payments.
According to a statement from the office of the California insurance commissioner, Prudential must regularly check the death master file to determine whether any of its life insurance policyholders, or owners of annuities have died. The company then should make efforts to repay those claims to the beneficiaries of policyholders.
Prudential must “use death master and all other means available to them to ensure that when life insurance policyholders die, their beneficiaries receive the benefits owed,” Jones said in a statement.
Under the deal, if beneficiaries cannot be located, Prudential must turn the proceeds owed to beneficiaries over to the states as required by state unclaimed property laws.
The agreement becomes effective after 20 states sign it. Currently seven states have signed the agreement. They include: Florida, California, Illinois, New Hampshire, North Dakota, Pennsylvania and New Jersey, have signed the agreement.
Regulators say tens of millions of dollars in policy benefits went unclaimed, in some cases for decades. New York regulators said in early December nearly $52 million in claims had been paid out since they started pressuring insurers on the database issue.