Insurer Aflac reaches combined $350,000 settlement with five states

Jan. 16--Aflac, which sells supplemental health and life insurance policies in the U.S. and Japan, reached a collective $350,000 settlement with five states just before Christmas.

The company, headquartered in Columbus, reached the settlements related to failing to notify the beneficiaries of policyholders who had died, the Florida Office of Insurance Regulation, the Florida Department of Financial Services and the Florida Office of the Attorney General said Dec. 21.

Aside from Florida, the other states that took part in a multi-state examination of both Aflac and State Farm were California, New Hampshire, North Dakota and Pennsylvania. State Farm's collective settlement with the states was $250,000.

The money paid to the states by Aflac and State Farm primarily goes to paying for the expense of the state investigations, as well as future monitoring for compliance.

Neither of the companies admitted to any wrongdoing in the settlements. They did agree to several steps moving forward when policyholders die, including using the Social Security Administration's Death Master File to find out if the insured, annuitant or account holder is on it.

Other steps include comparing all company records with the Death Master File monthly, giving states involved in the settlement quarterly reports on actions taken due to the agreement for 36 months following its conclusion, and agreeing to an additional compliance examination shortly after that.

Aflac on Tuesday issued a statement through spokesman Jon Sullivan on the matter, saying that it is taking steps to ensure those eligible for benefits receive them.

"As California Insurance Commissioner Jones said in a recent press statement, Aflac has indeed stepped up and done the right thing for policyholders by incorporating the Social Security Administration's Death Master File to identify individuals who might otherwise be unaware that they are eligible for benefits, which we have been doing since 2012," Sullivan said. "The DMF is a useful resource as it enables us to better serve our policyholders and facilitate our goal, which is to deliver needed benefits during difficult times."

It was in 2012 that Aflac was fined a combined $1.6 million by three states -- Idaho, Minnesota and Missouri -- following a review of its business. It also included the submission of compliance reports over three years. The "market conduct" reviews, launched in 2009, covered a variety of areas, including underwriting, sales and marketing, sales agent licensing, handling of complaints and claims practices, according to a settlement order from the three states.

Aflac, in its 2017 annual filing with the U.S. Securities and Exchange Commission, acknowledged it must enter the legal realm from time to time as a routine part of its insurance business.

"We are a defendant in various lawsuits considered to be in the normal course of business," the filing said. "Members of our senior legal and financial management teams review litigation on a quarterly and annual basis. The final results of any litigation cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, we believe the outcome of pending litigation will not have a material adverse effect on our financial position, results of operations, or cash flows.

Tony Adams: 706-571-8574, @ledgerbizz

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