Insurance Commissioner Dave Jones and State Controller John Chiang on Monday announced issuing a subpoena and ordering a hearing into New York-based MetLife, looking into the practices of the life insurer, including allegations that the company failed to pay life insurance benefits after learning that the insured person had died.
Jones and Chiang are responding to an audit launched in 2008, which found that for two decades, MetLife failed to pay life insurance benefits to beneficiaries or the state after an insured person had died, according to a statement. Even when the company knew that the owner of an annuity contract had died, the company didn’t contact the beneficiary, even though it had access to a database administered by the Social Security Administration, called the death master. Instead, MetLife continued making premium payments from the account until the cash reserves were used, and cancelled the contract, according to the statement.
“The thrust of this hearing is to determine whether MetLife, one of the largest life insurers and issuers of annuities in the United States, engaged in unfair practices regarding the payment of life insurance claims to beneficiaries,” Jones said in a statement.
“California families buy insurance to provide for their retirement security and the financial security of their families when they die,” Chiang said. “The benefits should be paid to the policy beneficiaries or to the state to return to the rightful owners.”
On Friday, Chiang announced working out a settlement with insurance company John Hancock. John Hancock, a subsidiary of Manulife Financial Corp., agreed to restore full value of accounts where the company drew down the account after the death of the policy holder