MetLife to Pay States $500 Million in ‘Death Master’ Probe

April 23, 2012

MetLife Inc., the largest life insurer in the United States, will pay $500 million to settle a multi-state investigation into claims payment practices, the office of California’s state controller said on Monday.

The investigation related to the use of the Social Security “Death Master” file, which lists people who have recently died. A number of states have accused insurers of using the list to stop making annuity payments to dead customers, but at the same time not using the list to check whether any life insurance policy holders had passed away.

Earlier on Monday, New York officials said their own probe into Death Master abuses had led insurers to make more than $260 million in payments to policy beneficiaries who may not have been aware they had money due to them.

California led the settlement and will get about $40 million of the proceeds, a spokesman for controller John Chiang said.

The deal requires MetLife to restore the full value of any account that was improperly drawn down, comply with state unclaimed property laws and pay 3 percent compounded interest on held amounts from the later of the policy owner’s death or Jan. 1, 1995.

[There are still eight active investigations underway into insurance companies’ usage of the Social Security “Death Master” file, the president of the National Association of Insurance Commissioners said on Monday.

Kevin McCarty, who is also Florida‘s insurance commissioner, said the NAIC is hoping for global settlements with those companies like the one announced with MetLife on Monday.]

MetLife shares were up 0.8 percent at $35.24 in afternoon trading. Last October, the company said it would take a charge of up to $135 million to adjust reserves for cases related to the Death Master probes where it might have to make payments.

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