Aegon (AGN) NV’s Transamerica and New York Life Insurance Co. are among 11 insurers that will pay a combined total of as much as $763 million to resolve a multistate probe into whether the firms held funds that should have gone to beneficiaries.
The insurers agreed to make overdue payments plus interest and to change business practices to reduce the chance for delays, according to a statement today from California Controller John Chiang, who said beneficiaries in his state will get about $86.7 million.
State regulators have been scrutinizing insurers over withholding payments on policies that may have been purchased decades ago. MetLife Inc. (MET:US) and American International Group Inc. (AIG:US) reached deals with state watchdogs last year to pay claims and said they would use the Social Security Administration’s Death Master File to determine if policyholders have died.
“Too often, insurers have sidestepped their legal responsibility to make good on insurance policies purchased by their clients,” Chiang said in today’s statement.
The probe found that insurers held onto death benefits they should have paid out, continuing to collect premium payments from the accounts of people who had died, according to the statement. The largest payment, about $275 million, will come from Transamerica, a unit of the Hague-based Aegon, according to a list from Chiang’s office.
Western & Southern
New York Life’s payment will be $110 million and Cincinnati-based Western & Southern Financial Group Inc.’s is $165 million, the list shows. Both insurers are owned by policyholders.
“Any estimate of payments at this time is purely speculation,” a group of insurers including Transamerica, Western & Southern and New York Life said in a statement. The agreement “will help us ensure that the beneficiaries who were unaware of their life-insurance benefits will be found and will receive those benefits.”
The payments are $33 million for Richmond, Virginia-based Genworth Financial Inc. (GNW:US) and $18 million for Hartford Financial Services Group Inc. (HIG:US), according to Chiang’s office. Genworth said the settlement won’t have a material financial impact.
“Genworth has done everything the law and current regulations ask, and in most cases we have gone beyond that standard,” Al Orendorff, a spokesman for the company, said in an e-mail. “This agreement addresses the tiny fraction of life insurance benefits that have gone unclaimed over the years where deaths have not been reported to us and beneficiaries have not come forward to claim life insurance benefits.”
Hartford, based in the Connecticut city of the same name, said, “The controller made a proper and correct decision in not fining or imposing any fee or penalty on the participating companies.”
“We have done everything the law and current regulations ask, and in most cases we have gone beyond that standard,” Tom Hambrick, a Hartford spokesman, said in an e-mailed statement.
Unclaimed life insurance benefits are a “very small percentage” of total claims, the American Council of Life Insurers said in a statement.
Chiang last year announced a $500 million settlement with MetLife, the largest U.S. life insurer, and a $300 million deal with AIG. Both insurers are based in New York.
To contact the reporter on this story: Zachary Tracer in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Dan Kraut at email@example.com