Your father dies and after the funeral you and your siblings are sitting around and someone remembers that Dad mentioned he took out a life insurance policy years ago. You and your family tear through all his paperwork and can’t find any record or life insurance policy. In fact, your father did purchase a whole life policy decades ago. To match the death benefit with the beneficiaries of those long lost policies, life insurance companies are supposed to routinely check the state’s Death Master File.
Death Master File
Unfortunately, state insurance departments found out that some life insurance companies were only using the Death Master File to discontinue annuity payments to people who had died. They were also supposed to be cross checking to see if any of their life insurance policy holders had died so they could pay the death benefit to the beneficiaries.
ING agrees to pay millions
California Insurance Commissioner Dave Jones announced that his office, along with other states, have reached an agreement with ING over the misuse of the Death Master File. This follows after similar agreements were reached with other carriers earlier this year. ING has agreed to pay $10.7 million to insurance regulators.
MassMutual cleared of abuse
Some of the insurance companies had pleaded ignorance by stating that the Death Master Files were confusing and hard to use. However, California cleared MassMutual of any abuse as they were able to successfully utilize the Death Master File to cross check reported deaths with their issued policies. So, either the insurance companies need to hire employees competent enough to search the Death Master File or they should cease selling life products which are far more complex than searching a state’s database of recorded deaths.
California Department of Insurance News Announcement of Settlement
Insurance Commissioner Dave Jones Announces
Death Master settlement with ING
Conduct exam of a second insurer finds MassMutual using Death Master Database properly
SACRAMENTO, Calif – Insurance Commissioner Dave Jones announced today that the California Department of Insurance has, with other state insurance regulators, reached a settlement agreement with ING over the insurer’s use of the Social Security Administration’s Death Master database to ensure policyholders and beneficiaries are protected. In addition, state insurance regulators also released a market conduct examination report clearing another large insurer, MassMutual, of any improper use of the database. The fact that MassMutual complied with the law in its use of the Death Master database undermines non-complying insurers’ assertions that the legal requirements for use of the Death Master file were not understood by insurers.
ING has agreed to a number of business practice reforms, including using the Death Master database to search its records for deceased life insurance policyholders so that its beneficiaries may be paid. In addition, ING agreed to pay $10.7 million to insurance regulators. The national investigation of ING’s practices was led by insurance regulators from Florida, California, Connecticut, New Hampshire, Pennsylvania, Illinois and North Dakota.
For many years, life insurers have used the Death Master database to search for and stop payments to annuity holders, but did not use the database to identify their own deceased life insurance policyholders whose beneficiaries are owed life insurance proceeds. It is estimated that through this practice, insurers avoided paying billions of dollars in life insurance proceeds to beneficiaries and also failed to turn over unclaimed proceeds to state controllers throughout the United States.
“This settlement is another step forward in changing life insurance industry practices regarding the use of the Death Master database,” said Commissioner Jones. “ING has agreed to do the right thing by reforming its use of the database to benefit policyholders and I commend its participation in this agreement. I would also like to commend MassMutual for its exemplary behavior. For years it has used Death Master symmetrically on both the life and annuity sides of its house. It should be recognized by the industry as a model of best practices.”
ING is the 7th largest life insurance company in the nation with over $24 billion in annual premiums. MassMutual is the 11th largest insurance company in the nation with over $21 billion in annual premiums.
With the ING agreement and the release of the MassMutual report, eight life insurers representing nearly 43 percent of the total national market have conformed or agreed to reform their business practices and use the Death Master to search for deceased policyholders and make benefit payments.
A number of other large life insurers, including life insurance giant New York Life, continue to be the subject of investigation by state insurance regulators.