Nationwide Life Insurance and some of its affiliates have inked a settle agreement over death benefits case with the Pennsylvania Insurance Department, pursuant to which the underwriter will pay $7.2m to state insurance departments.
The other insurance departments include Florida, Illinois, New Hampshire, North Dakota, Pennsylvania and Ohio and the settlement will come in force, when 14 additional state insurance departments will sign the agreement.
A multistate task force headed by Florida Insurance Commissioner Kevin McCarty found that the insurers have failed to pay more than $1bn in death benefits, as the process requires filing a claim following a death of the policy holder.
As per the settlement, the underwriter has also agreed to place necessary reforms to ensure faster pays out of life insurance, annuity, and retained asset account benefits to the customers and their survivors.
The insurer will use Social Security Death Master File or similar database on monthly basis to check, whether the policyholder is alive or died.
In the event of death, the insurer will contact the nominee of the deceased using contact information in its records and other means, and when unsuccessful, it will transfer the benefit to the appropriate state controller as unclaimed property.
In similar cases, the state insurance departments fined Prudential $17m, while MetLife paid $40m.