New York Gov. Andrew Cuomo said this week that a regulatory investigation into how insurers tracked life insurance policyholders resulted in 32,715 payments to consumers nationwide.
The overall amount paid by insurers is $262.2 million, including 7,525 payments totaling $95.9 million to New Yorkers.
According to the New York Department of Financial Services (DFS), many insurers regularly received a list of recent deaths from the Social Security Administration but were not mandated to use and, therefore, were not using the list to determine if a policyholder had died.
That means if a family member didn’t know about an existing life insurance policy or simply forgot to file a claim, that policy went unpaid. As a result, regulators said, tens of thousands of families didn’t receive their life insurance benefits.
On the other hand, the investigation also found that insurers often did use the list of recent deaths to verify the status of people getting annuity checks, and, when a death was verified, the insurers stopped the annuity payment.
“This investigation makes it perfectly clear that something must be done to make sure families across New York receive the life insurance benefits that they are due,” Gov. Cuomo said. “In the wake of this investigation, New York will now mandate that insurance companies actively search the list of recent deaths so money will be paid to beneficiaries instead of being trapped in limbo and a new website will help families search for lost or forgotten policies.”
“The department gets frequent calls from people who say, ‘I know my parents were insured, but I can’t locate the policy and I don’t know which insurance company issued the policy.'” DFS superintendent Benjamin Lawsky said.
“There is simply no reason why insurance companies shouldn’t be scrubbing their policy lists with the death index database on a frequent basis. Running these computer matches isn’t much of a burden and the benefits to consumers are significant.”
As a result of its investigation, the state demanded that insurers use the U.S. Social Security Administration’s Death Master File to investigate policies for which no claims have been made and to find beneficiaries who are eligible for benefits but have not filed claims.
New York was the first state to order the cross-check policy and will issue a regulation to mandate this action in the future. Following that edict, insurers reported they cross-checked 89.58 million records. Insurers are still investigating more than 445,000 potential matches for unpaid claims.
Some of the larger individual payments made so far include the following:
• $344,757.37 to a Northport, N.Y., beneficiary on an individual life insurance policy where the insured died in 2007.
• $217,031.88 to a Rockville Center, N.Y., beneficiary on two individual annuities where the annuitant died in 2006.
• $138,051.81 to a Queens, N.Y., beneficiary on an individual life insurance policy where the insured died in 1998.
• $107,399.60 to a Brooklyn, N.Y., beneficiary on an individual annuity where the annuitant died in 2005.
Gov. Cuomo also said the state launched a free online lost policy finder to locate life insurance policies that have been lost or misplaced. The application can be found at www.NYPolicyFinder.com. It can be to locate both life insurance policies and annuity contracts.
Policy search applications will be submitted to the New York department of financial services, which will electronically notify New York licensed life insurance companies and fraternal benefit societies.
Insurers will search their records to determine the existence of a life insurance policy or annuity contract. Insurers will then electronically report the search results to regulators within 30 days, and the regulators will notify requestors whether or not a policy has been identified by any licensed insurer. If a policy is identified, the insurer will begin the claims process for paying proceeds to beneficiaries.