Life Insurance Cos. Settle After Missing $174M+ In Payouts To Minnesotans
The Minnesota Department of Commerce reached a new milestone on Tuesday in its ongoing investigation into 16 insurance companies that failed to pay Minnesotans millions of dollars owed through insurance policies, some of which date back to the 1980s.
Life insurance companies AXA Equitable, Jackson National and New York Life Insurance reached settlement agreements with the Commerce Department, bringing the total number of settlements to nine. Previous settlements involved John Hancock, Lincoln, MetLife, Prudential, Transamerica and Voya (previously ING).
The Commerce Department’s investigation uncovered $174 million owed to Minnesotans for unpaid insurance policies, annuity contracts and retained asset accounts.
“It goes back about five years when the problem was initially identified,” said Ross Corson, a spokesperson for the Commerce Department. “We were seeing that there was quite a bit of unclaimed property that these insurance companies had, and that suggested there was some sort of problem with their practices in terms of paying off their claims.”
Ultimately, the Commerce Department determined insurance companies had inadequate information and improper procedures to identify beneficiaries and policyholders. Upon checking their client’s Death Master File, insurance companies would stop annuity payments to the policyholder, but not follow through on life insurance payments that were owed. In the end, money never reached the parties that expected benefit payments.
“These policies can be as little as a few thousand dollars or as much as several hundred thousand dollars,” Corson said, “but we’re talking at least thousands, if not tens of thousands, of policyholders [affected].”
The Commerce Department is still investigating seven other insurance companies that supposedly retained millions of dollars in unpaid policies. Of the $174 million uncovered so far, beneficiaries have claimed $143 million. An additional $31 million has remained unclaimed by beneficiaries who still cannot be located.
The nine insurance companies that reached settlements also paid $12.6 million in penalties to the state. Moving forward, those companies will be subject to ongoing monitoring by the Commerce Department to assure corrective actions are taken.
In a statement, Minnesota Commerce commissioner Mike Rothman encouraged Minnesotans to make sure their insurance company has up-to-date contact information for themselves and their beneficiaries. “Many people are never told they are named as beneficiaries in life insurance policies,” he added, “so they often have no idea an insurance payment is owed to them.”