Florida insurance regulators have successfully negotiated a settlement with another life insurance company over unpaid death benefits. As one of the six lead states in this effort and other insurance industry matters, Florida is making a name for itself as an enforcer. The direct benefit, if any, to Sunshine State residents is unknown, though.
The settlement means that Nationwide Financial Services Inc. will revise its procedures for identifying deceased policyholders and their beneficiaries. From this point forward, the company will check its list of policyholders against the Social Security Death Master File and will make more of an effort to locate beneficiaries when the company learns of an insured’s death. Nationwide is the fourth company to agree to these terms; MetLife Inc., Prudential Financial Inc. and John Hancock, a division of Manulife Financial Corp. relented earlier this year.
While it looks like common sense to consumers, the change is a significant departure from traditional life insurance procedures. For more than a century, insurers have required beneficiaries to notify the insurer upon the death of the insured; the provision is part of the standard policy. When regulators discovered that insurance companies were holding onto millions of dollars of unclaimed benefits, though, they started to work with industry leaders on shifting the burden to the insurance companies.
Nationwide told the Wall Street Journal in August that it pays out about $1 billion every year to beneficiaries of life insurance policies and annuities. The company also said they use the “death database” and other tools to locate beneficiaries; with the agreement, the company said, the normal procedure will include a regular, monthly check against the death database.
Fortunately for the insurers, technology will do most of the heavy lifting. When the system identifies a beneficiary, the company will notify the person and send out forms and instructions for filing a claim. To make sure Nationwide sticks to the agreement, the company will update Florida and the other states quarterly on its compliance efforts.
Source: The Wall Street Journal, “Nationwide Settles Benefits Case,” Leslie Scism, Oct. 11, 2012
Our firm works with life insurance beneficiaries who are having trouble with companies like the ones discussed in this post. You can learn more about our practice by visiting our Miami life insurance claims page.Share