by Brian Mahany
John Hancock agreed to pay $20,000 to settle charges in California alleging that the company failed to promptly pay death benefit claims. California has been auditing insurance companies for the last several years. Charges against other carriers are likely to follow.
Like many states, California requires unclaimed property be turned over to the state after a short period of time. In California, that’s three years. Most states maintain an abandoned property register making its easy for people and their heirs to search for missing bank accounts.
With so many mergers and bank failures, abandoned property laws help dormant accounts from simply slipping between the cracks and being lost forever.
John Hancock is the first insurance company to settle with the state. During the investigation, regulators found that carriers failed to cross check government registers to see if their life insurance clients had died and sometimes knew that their client had died but failed to tell beneficiaries.
The problems in the insurance industry are not limited to John Hancock or life insurance. The California report found that problems are also rampant with annuities as well. In one case, regulators found that a carrier waited four years after being notified of the death of the annuitant before disbursing funds.
California isn’t the only state looking into insurance practices. Florida, home of many retirees, is participating in a task force looking at insurance settlement practices. According to a press release issued yesterday, regulators claim that some insurance companies use the Social Security death master file to find out when someone has died so they can stop making annuity payments, however they then fail to notify beneficiaries.
A published report in Investment News says that Florida regulators have subpoenaed records from both Metropolitan Life and Nationwide Life. Neither company has been accused of any wrongdoing.
Mahany & Ertl is a full service, boutique law firm concentrating in fraud recovery matters. If you have been denied coverage or denied benefits, visit our insurance bad faith information page. Ready to see if you have a case? Give us a call. In many cases we can handle your claim on a contingency fee basis meaning no charge for legal fees unless we win. For a no obligation, no nonsense review of your claim, contact Brian Mahany today at (202) 800-9791 or at