Lawsuit: Florida life insurers and unclaimed benefits, part 3

We have been talking about a lawsuit filed by an asset recovery company against several life insurance companies. At issue is how the companies track insureds and locate beneficiaries once an insured has passed away. Florida has been at the forefront of putting pressure on life insurers to implement more efficient and effective internal procedures.

In part, the states’ effort is driven by consumer protection considerations. It is important to keep in mind, though, that insurance companies must eventually turn over unclaimed benefits to the state. In Florida, if the funds remain unclaimed, the money is shifted to a fund for public education.

The case we have been discussing is not the only one out there. An individual in another state has filed a claim that he believes should be certified as a class action. The chief issue in this suit is that the defendant insurance company and others have used the Social Security Death Master File for their own gain.

The argument is the same one that led the states to pursue the insurance companies in the first place: Insurers match names on the DMF to the names of people the company is paying annuities to, but it does not exercise the same care with life insurance policyholders and beneficiaries.

But this litigation takes a different approach. The plaintiff is an individual, and he maintains that the settlement agreement the insurers entered into with the states does not absolve them of liability in individual cases.

We will get into more detail in our next post.

Source: Legal Newsline, “Others working to make sure insurers dole out unclaimed property properly,” Bethany Krajelis, May 2, 2013

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