MetLife has agreed to pay $500m in a multistate settlement with Florida insurance investigators in connection with holding death benefits from life insurance policies issued decades ago.
The regulators accused the US insurer over non issuance of funds, which should go to beneficiaries and asked the firm to improve its system for identifying unclaimed life-insurance policies.
MetLife will release $188m in 2012 to the actual beneficiaries, and remaining funds will be provided over the next 17 years.
The settlement involves approximately 708,000 policies across the US, issued between 1900 and 1963.
The insurances regulator had directed the firm to use Social Security Administration records to determine when policyholders die.
Florida Insurance Commissioner Kevin McCarty said that for many years a number of insurance companies have selectively used the Social Security ‘Death Master’ file to cut off payments to annuity holders, but did not use that same database to identify deceased life-insurance policyholders to initiate payment of claims.
Life insurance firms have faced increased scrutiny from regulators in Florida, California and other states over unpaid benefits.
California Controller John Chiang said that MetLife didn’t use information the insurer had from Social Security data to pay benefits and wasn’t forwarding funds to his office as unclaimed property.
Life insurers are generally required to pay claims after being notified of a policyholder’s death and receiving a valid death certificate.