Two insurers are jointly paying the state of Minnesota $4 million to settle claims that they weren’t doing enough to find and pay proceeds to the beneficiaries of unclaimed life insurance policies and other insurance products.
MetLife and Transamerica have agreed to identify and pay thousands of Minnesotans their due benefits, and pay $1.5 million and $2.5 million, respectively, to the state. The insurers also agreed to clean up their data and improve their practices for locating people to prevent holdups in the future, according to the state Department of Commerce, which announced the agreements Tuesday.
Commerce Commissioner Mike Rothman said in an interview that the two companies had thousands of policyholders in Minnesota who died between 1986 and 2012 but whose beneficiaries never received a payment. Millions of dollars are owned to Minnesotans, he said. The products include life insurance policies, annuity contracts and retained-asset accounts holding proceeds from policies.
“The insurance companies knew, or should have known, that these policyholders had [died],” Rothman said.
The settlements are the latest in the Commerce Department’s ongoing examination of unclaimed insurance benefits that companies have held on to, sometimes for decades. At issue is how insurers were using a system known as the Social Security Death Master File to identify deceased policyholders, dating back to 1986.
The state has been investigating 11 insurers. Prudential Insurance Co. settled with the state last year for $14 million, and has returned more than $20 million to beneficiaries since then. The state expects similar results with MetLife and Transamerica.
Other settlement negotiations are underway.
State law requires insurance companies to turn over to the state any property from unclaimed policies or accounts the companies have been holding for more than three years, Rothman said. The companies were not doing that but have since started.
The orphaned payouts are stuck in the state’s general fund. The Commerce Department, which administers the unclaimed property program, is charged with finding the rightful owners. It has returned about $76 million to almost 39,000 Minnesotans in the past three years.
The state investigation has prompted many companies to turn over unclaimed property to the state’s fund, which has now swelled to record levels: There is about $610 million in unclaimed property waiting to be claimed by Minnesotans. That includes everything from keepsakes stuffed in forgotten safe deposit boxes and unclaimed paychecks to stocks.
The Commerce Department said it doesn’t know what portion of the $610 million is life insurance proceeds, the focus of its investigation. Rothman said that poor record-keeping at insurance companies has made it very difficult for Commerce to track down policyholders and their beneficiaries.
“We were surprised at the lack of information they had,” Rothman said.
People who suspect they may be due benefits from a policy with MetLife, Transamerica or Prudential should contact the companies at these numbers: MetLife, 800-543-3566; Transamerica, 855-807-2665; Prudential: 888-850-9991.