NEW YORK (Reuters) - Nearly 8,000 people received $52.6 million in previously unpaid life insurance benefits after New York authorities pushed insurers to match policies with a list of confirmed deaths, state officials said.
New York is one of many states probing overdue benefits. The initial results announced Monday by the state Department of Financial Services stem from an effort to have insurers seek out beneficiaries of deceased policyholders.
In addition to the 8,000 beneficiaries, claims processing has been initiated for almost 28,000 other beneficiaries, the Department of Financial Services said.
The department recently sent letters to 172 life insurers and fraternal benefit societies, telling them to use U.S. Social Security Administration information or similar database to identify deceased policyholders of life insurance policies and account holders of annuity contracts and retained asset accounts.
There may be times when someone has died and no claim has been filed but premiums continue to be deducted from the account value or cash value until the policy lapses, according to a report Monday by the department.
Sometimes beneficiaries may be unaware they were named as a beneficiary and not realize they need to file a claim, the report said.
A “small number” of insurers, including Massachusetts Mutual Life Insurance Co and Prudential Insurance Company of America, had been performing regular cross-checks with the lists for a number of years, the department said.
“Our companies are cooperating fully with the department in this cross-check process,” said Thomas Workman, president of the Life Insurance Council of New York. He said the department had asked them to go back more than 25 years and that they were going “beyond what the law requires.”
New York Attorney General Eric Schneiderman and state Comptroller Tom DiNapoli said in November they were joining forces to investigate life insurance practices after both uncovered data that some funds may have been improperly withheld.
Schneiderman had been probing the industry’s failure to pay benefits and turn over unclaimed proceeds to the Comptroller’s office as required by state law.
Schneiderman sent subpoenas in July to nine leading life insurers seeking information about their practices in identifying and paying out policies for deceased customers, a person familiar with the matter said in July.
Editing by Gary Hill