Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Oct. 24--CONCORD -- American International Group (AIG) has been added to the list of insurance companies agreeing to settle a regulatory case involving New Hampshire and six other lead states.
The seven states have been pushing the insurance companies to use the Social Security Administration's master file database to determine who may be eligible for death benefits, even if no claim is submitted.
The investigation by the states' insurance commissioners found that AIG and other companies selectively used the Social Security database to cut off annuity payments, but did not use it to identify deceased life insurance policyholders in order to pay death benefits to their beneficiaries.
According to the terms of the settlement, AIG must regularly check the Social Security database or similar source of information to determine if the owner of a life insurance policy, annuity or retained asset account has died.
"The company then must comply with New Hampshire law to take reasonable steps to pay those insurance benefits to the named beneficiaries," said Keith E. Nyhan, a spokesman for the New Hampshire Insurance Department.
MetLife, Prudential and Nationwide signed similar agreements with New Hampshire and the other states earlier this year.
Beneficiaries may not be aware of their status or may not be aware that the policyholder has died, although such cases are rare. In agreeing to the settlement in April, MetLife reported that more than 99 percent of life insurance claims are submitted by beneficiaries and routinely paid in a timely and accurate manner.
The insurance companies have agreed to pay fines to be shared by the seven states, and to investigate claims that should have been paid in the past. MetLife is expected to pay more than $200 million to consumers nationwide.
"I think the primary beneficiary of these examinations are those beneficiaries who will now be notified that they are owed money," Nyhan said. "If they can't find the beneficiary, for whatever reason, eventually the money would be given to the state and appear as abandoned property in the annual abandoned property report."
The penalties, $11 million in the AIG case, will be divided among the seven states. The states joining New Hampshire in the settlement are Texas, California, Florida, Illinois, North Dakota and Pennsylvania.
For more information, consumers can call the Insurance Department at 800-852-3416 or go to www.nh.gov/insurance.
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Dave Solomon may be reached at email@example.com.
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