By Elizabeth Festa
States wrote another chapter in their series of multistate life insurance settlements regarding the use of the Death Master File (DMF)
database with Netherlands-based Aegon’s agreement to pay $11.2 million to insurance regulators.
Under the agreement, the company and its affiliates will complete one full comparison of all policyholders against the DMF and will enhance procedures to conduct more thorough searches for beneficiaries, among other business practice reforms.
The goal is to search the DMF records for deceased life insurance policyholders so that its beneficiaries may be paid.
The principal lead state in this investigation was Illinois with support from insurance regulators from Florida, California, Connecticut, New Hampshire, Pennsylvania and North Dakota. Iowa and Vermont contributed to the investigation as states where Aegon is domiciled.
Settlements arise alongside the state settlements and stem from the somewhat prevalent practice across the industry of using the DMF only when it suits the company, as has been alleged. Legally, insurers should be checking the DMF every three months.
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, according to the California Department of Insurance (CDI).
Aegon is the 10th largest life insurance company in the nation with more than $21 billion in annual premiums. The settlement includes the following insurance companies: Transamerica
Life Insurance Co., Transamerica Advisors Life Insurance Co., Transamerica Advisors Life Insurance Co. of New York, Transamerica Financial Life Insurance, Monumental Life Insurance, Stonebridge Life Insurance, Western Reserve Life Assurance Co. of Ohio and each of its subsidiaries.
With the Aegon agreement, 10 life insurers representing more than 45 percent of the total national market have conformed or agreed to reform their business practices and use the DMF to search for deceased policyholders and make benefit payments.
The DMF is the primary tool by which the life insurance industry determines when annuitants and policyholders have died, serving to notify insurers when lifetime payments can be halted and to notify beneficiaries when death benefits can be paid out.
Other settlements — including those with Prudential Financial, MetLife, TIAA-CREF, John Hancock, Nationwide Mutual and AIG — have found discrepancies and required payments for alleged noncompliance.
“The DMF is an extremely accurate and valuable tool that may be utilized by insurance companies and financial institutions to identify deceased individuals, and the GAO’s testimony is simply part of ongoing efforts by the government to make the DMF even more reliable,” Jeffrey Drubner, president of Verus Financial, a Waterbury, Conn., auditing firm has stated before.
The issue is a growing one to the insurance industry because use of the DMF is a key component of an aggressive move by states to determine whether insurers are doing enough to find beneficiaries, or, in the alternative, turn the money over to the states.
Dave Postal contributed to this article.
Originally published on LifeHealthPro.com