California to Investigate 10 Largest Life Insurance Providers

Dave Jones, California’s Insurance Commissioner, has stepped up his effort to investigate top life insurance companies. The top 10 companies in the industry, the commissioner says, have been accused of not properly paying death benefits to family members after policyholders have died, which is illegal.

Companies Accused of Not Paying Benefits

Similar to an investigation against John Hancock Life Insurance Co., Jones wants to take a look at the top 10 life insurance companies under the accusation that these companies are not ensuring the beneficiaries of deceased policyholders get paid.

The fact that these companies allegedly have not been contacting beneficiaries for payout is heightened by the fact that the companies are said to make an active effort to find deceased annuity customers so that they can stop making annuity payments.

In addition to John Hancock, the states facing investigations are MetLife, Prudential, Nationwide, New York Life, Lincoln National, Sun Life Financial, The Hartford, Pacific Life and Aegon Group.

Jones intends to push for so-called market conduct examinations in 35 states, which will probe violations of the law by these companies. If insurers are found guilty of illegal claims-paying practices, they could face fines, restitution and possible license suspensions.

Evidence of Wrong-Doing Already Revealed

Jones says he has already found evidence that MetLife failed to pay money to beneficiaries for two decades and also failed to submit money to the state’s lost or abandoned fund, which was created to ensure no money is wrongfully spent by insurance companies if they are unable to find beneficiaries over a three-year period.

Florida Insurance Commissioner Kevin McCarty said in state hearing that he estimates life insurers may owe beneficiaries and the 50 states more than $1 billion in unclaimed assets. The money is sitting in insurers’ retained asset accounts, which are beneficial to companies as they grow interest on those assets.

Regulators believe the 10 companies noted are trying to hold on to the money to increase their income instead of paying out to the proper parties. Jones and other regulators expect other carriers will be included in the probes in the coming months.