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State directs insurers to pay unclaimed proceeds

New regulations, put in place by the state Department of Financial Services, require all life insurers doing business in New York to regularly search a government list of recent deaths to identify deceased policyholders and then find and pay beneficiaries of policies for which no claims have been made.

Last July, the DFS initiated an investigation into life insurers claims practices that has resulted in 32,715 payments of $262.2 million to consumers nationwide, including 7,525 payments totaling $95.9 million to New Yorkers. New York was the first state to order the cross-check policy, but that order only applied to policies in existence at that time.

The DFS investigation found that many insurance companies regularly checked the list of recent deaths from the U.S. Social Security Administration to stop making payments on annuities after annuitants had died. Yet those same insurers failed to use the list to determine if a life insurance policyholder had died and proceeds were payable to beneficiaries.

As a part 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.

The new regulation also requires life insurers to submit every year to the Office of the State Comptroller the number of policies for which a death occurred but for which the insurers were unable to find the beneficiary.

 

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