Controller Reaches Settlements with Transamerica, New York Life and 9 Others
Targeted News Service |
State Controller
"Too often, insurers have sidestepped their legal responsibility to make good on insurance policies purchased by their clients to provide peace of mind and financial security to their families," said Chiang. "I'm pleased that these eleven companies have come forward and agreed to do what is right by their clients."
The multi-state settlements resulted from Controller Chiang's five-year investigation into the life insurance industry's compliance with state unclaimed property laws. Administered by the Controller,
The Controller's investigation has revealed an industry-wide practice of companies both failing to pay death benefits to the beneficiaries of life insurance policies and ignoring their legal duty to turn the money over to the State for safe keeping. Instead, companies would draw-down the policies' cash reserves in order to continue collecting premium payments from the deceased. Once the cash reserves were depleted, the company would cancel the policy. Past audits also found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased. In other cases, companies had direct knowledge of the policy owner's death, but still did not notify the beneficiaries.
The companies involved in the latest settlements include:
Like previous settlements, the agreements announced today require the companies to do the following:
* Restore the full value of all impacted accounts dating back to 1995;
* Fully comply with
* Pay the policy beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner's death, whichever is later.
To date, Controller Chiang has reached global settlements with 18 life insurance companies, with an aggregate value of
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