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State Regulators to Review Life Insurance Payment Practices

Source: NAIC

Posted on 19 May 2011

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Working through the National Association of Insurance Commissioners (NAIC), state regulators have formed a special task force to help coordinate regulatory investigations involving the claim settlement practices of life insurance companies. 

Specifically, insurance regulators have been investigating a number of large life insurance companies regarding the possible failure to pay death benefits to beneficiaries of life insurance policies. The alleged practices include use of the Social Security Administration’s Death Master File by insurers for purposes of terminating payments under annuity contracts, but failing to use this same information to facilitate the payment of claims on life insurance policies.

“State regulators are committed to reviewing the full extent of these practices in the life insurance and annuity industry,” said Susan E. Voss, NAIC President and Iowa Insurance Commissioner. “ We intend to coordinate multi-state examinations to effectively utilize our state resources in achieving resolution of these issues.”

Members of the newly created task force include California, Florida (chair), Illinois, Iowa, Louisiana, New Hampshire, New Jersey, North Dakota, Pennsylvania and West Virginia.

To date, the NAIC task force is coordinating with both the Florida Office of Insurance Regulation and the California Department of Insurance to conduct two joint public hearings to review industry claims settlement practices. Below is information on each scheduled hearing: