MN, Prudential Reach $14M Settlement Over Unpaid Policies
Minnesota’s Department of Commerce reached a $14 million settlement Wednesday with Prudential Financial, Inc., over unpaid life insurance policies—and thousands of Minnesotans could receive payouts.
The settlement was the result of a targeted examination by the Commerce Department that dates back to 1986 and focused on Prudential’s handling of life insurance policies, annuities, and retained asset accounts.
The examination revealed holes in Prudential’s accuracy and availability of the contact information they use to identify policyholders and their beneficiaries, the Commerce Department said. For example, following the death of some Prudential policyholders, if no claims were made, the company failed to identify and contact the individual’s beneficiaries.
If family members or beneficiaries were unaware that life insurance policies or annuities existed, because Prudential didn’t contact them, they might be owed policy proceeds.
“It’s exceptionally troubling that when insurance companies know someone has passed away, that there wasn’t an appropriate attempt to find the beneficiaries,” Commerce Commissioner Mike Rothman told the Star Tribune. “This is a very important settlement for Minnesota. It corrects a very improper practice that these companies have been doing for quite a long time.”
The Commerce Department is requiring Prudential to review its records for Minnesota-related policies as far back as 1986 to ensure that company records include accurate social security numbers and birth dates to identify deceased policyholders and connect beneficiaries.
Prudential has identified up to $13 million in unpaid policies, accrued between 1986 and 2010, which may be owed and returned to Minnesotans. Those proceeds will be paid directly to the beneficiaries or to the state as unclaimed property if the beneficiaries cannot be located. The settlement also includes a $1 million payment to the state.
“Consumers purchase life insurance policies to ensure that their loved ones have some financial security upon their passing and trust that the money will reach their beneficiaries,” Rothman said in a statement. “Today, the Department of Commerce and Prudential agreed on how the company should put in place the safeguards to ensure the life insurance funds reach their rightful owner.”
In the future, as a result of the settlement, Prudential must provide enhanced procedures to find beneficiaries when policyholders have died, improved customer-service assistance in making a claim, and compliance with Minnesota’s claim-handling and unclaimed property laws if the company is unable to identify or locate policyholders or beneficiaries in a timely manner, according to the Commerce Department.
Prudential spokesman Bob DeFillippo told the Star Tribune that the company has made similar settlements in almost every other state, with Minnesota being among the last. While Rothman views Prudential’s practices as “improper,” DeFillippo viewed the examination in a less accusatory light.
“There’s no wrongdoing here,” DeFillippo told the Minneapolis newspaper. “This is a matter of taking steps to locate these beneficiaries. No one is accusing us of not doing what we were required to do.”
According to the Commerce Department, Prudential worked cooperatively during the examination to solve its internal problems and locate the beneficiaries in compliance with Minnesota claim statutes.