Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
Illinois regulators announced a $1.9 million settlement with subsidiaries of Genworth Financial over payouts to life insurance and annuity beneficiaries. This is part of a larger settlement with states regarding the Social Security Administration’s Death Master File.
Under terms of the settlement, Genworth Life Insurance Co., Genworth Life and Annuity Insurance Co. and Genworth Life Insurance Co. of New York have agreed to tighten business practices and implement reforms with respect to paying beneficiaries.
Andrew Boron, director for the Illinois Department of Insurance, said in a statement that the agreement would assure “timely pay” to beneficiaries of in-force life insurance policies and annuities using the Death Master File database.
“Over the years, Genworth has done everything the law requires to pay claims and in most cases has gone beyond that standard,” Tom Topinka, a spokesman for Genworth, said in a statement. “This agreement addresses the tiny fraction of life insurance benefits that have gone unclaimed over the years where death benefits have not been reported to Genworth and beneficiaries have not come forward to claim life insurance benefits.”
The $1.9 million settlement will pay for “for the examination, compliance and monitoring costs incurred by the departments associated with the Multi-State Examination,” the Illinois insurance commissioner’s office said, and was entered into “without admitting any liability whatsoever.”
Illinois was the lead state with regard to the Genworth settlement. Insurance regulators from Florida, California, Delaware, New Hampshire, North Dakota, Pennsylvania and Virginia lent support to Illinois, the Illinois Insurance Department said.
In the past two years some of the nation’s largest insurance carriers have settled with many states over the payouts to beneficiaries of deceased life insurance policyholders.
Last month, Lincoln National Life and two affiliates agreed to pay $12.6 million. In 2012, MetLife said it would pay out $438 million to beneficiaries as part of a settlement with California regulators. Other carriers and their affiliates or subsidiaries coming to similar settlements include AIG, New York Life, Aviva and Midland Life.
Topinka also said that Genworth had implemented procedures more than two years ago to look for “deceased insureds” using the database even with no legal requirement to do so until last year.
States took action after investigations and hearings found that insurance carriers didn’t do enough to pay benefits to beneficiaries of deceased policyholders, but some companies have filed suit against regulators on the grounds that neither state laws nor insurance contracts require them to pay beneficiaries.
“While Genworth did not agree with the task force’s legal position, settlement was more appropriate than proving Genworth’s case since Genworth has already implemented most of the changes sought by the task force,” Topinka said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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