* Probe related to use of Social Security deaths list
* States alleged insurers misused the data
* MetLife shares rise in afternoon trading
By Ben Berkowitz
April 23 (Reuters) – MetLife Inc, the largest life
insurer in the United States, will pay nearly $500 million to
settle a multistate investigation into unpaid claims for dead
policy holders, state regulators and the company 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.
The settlement follows a similar deal that Prudential
Financial, the country’s second-largest life insurer,
struck with 20 states in January.
The National Association of Insurance Commissioners, on a
conference call to discuss the MetLife investigation, said there
are still eight Death Master probes under way and that it is
hoping for settlements in those cases like the MetLife and
Prudential deals.
One state official said those two deals could force other
companies’ hands.
“We’re hopeful that this MetLife settlement is going to
dislodge a stone,” Adam Cole, the general counsel of the
California Department of Insurance, said in an interview. “They
have differing stances. We really do hope that with both
Prudential and MetLife, the other companies will realize it’s
important to enter into these agreements.”
A spokesman for MetLife said its settlement contemplates
$438 million in payments to policyholders and beneficiaries,
plus $40 million in settlement costs, for a total approaching
$500 million.
In a statement, MetLife said $188 million in payments will
be made this year and the rest over the next 17 years. The
company is fully reserved for the deal, having topped up the
reserve in the first quarter of this year.
“The company has been working with regulators to develop
industry best practices and is pleased to announce new processes
that will provide an even stronger safety net for the limited
number of beneficiaries who do not submit a claim to the company
in the normal course of business,” the company 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
amounts that had been held back, starting with either the date
of the policy owner’s death or Jan. 1, 1995, whichever came
later.
The company said it has set up an online system to help
people track down policies. It also said it is contacting older
policyholders, many of whom took out their insurance without
providing a Social Security number or date of birth, and in some
cases will offer them an accelerated payout on the policy.
MetLife shares were up 1.1 percent at $35.34 in afternoon
trading.
The lead states on the MetLife deal were California,
Florida, Illinois, New Hampshire, North Dakota and Pennsylvania.
Separately from the MetLife deal, 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.
