Multiple tracks on unclaimed property pactsNews added by LifeHealthPro on June 25, 2013
By By Arthur D. Postal
Insurance companies are apparently being engaged in a multi-front war as they seek to resolve state probes into their unclaimed property practices.
The different tracks came to light when six state regulators announced that they reached a global settlement of unclaimed property claims issues with TIAA-CREF Life Insurance Company, bringing to six the number of insurers reaching settlement on unclaimed property issues.
That conflicts with a statement by California comptroller John Chang made June 7 in which he stated that he had reached settlements with 19 insurers on unclaimed property issues.
The differences also came to light when the California insurance commissioner said in a statement that New York Life and other insurers are refusing to deal with the state commissioners.
New York Life immediately rejected that accusation in a statement, and noted that state unclaimed property administrators/treasurers and some insurance commissioners are more willing to work with insurers on the issues, as opposed to other commissioners.
New York Life’s statement brought to light the fact that independent probes of insurers are being conducted by state unclaimed property agencies or comptrollers, on the one hand, and state insurance departments on the other. The independent probes also involve use of competing outside auditing vendors. State insurance departments are also retaining outside auditors to conduct market conduct exams.
Besides that, West Virginia is suing more than 60 insurance companies, alleging non-compliance with state unclaimed property laws. The cases are awaiting court proceedings.
The TIAA-CREF Life Insurance Company agreement to implement business reforms using the Social Security Administration’s Death Master database was made with six states.
They are North Dakota, California, Florida, Illinois, New Hampshire and Pennsylvania, and TIAA-CREF also paid a $6.2 million fine divided up between the states.
Jones said in his statement on the settlement that New York Life Insurance Company was among companies that were declining to settle with California.
“TIAA-CREF has stepped up and is doing the right thing for its policyholders,” Jones said. “Policyholders should be disappointed that some other large life insurers, like New York Life, refuse to enter into a similar nationwide agreement with insurance regulators."
However, William Werfelman, a spokesman for New York Life, rejected Jones’ comment.
"The fact of the matter is that New York Life has already implemented the business reforms described by the California Insurance Department,” Werfelman said. “Any claims to the contrary are false."
“The only issue we have in California is that the Insurance Department seeks to extract a multi-million dollar penalty even though there is no basis in the law for such a penalty,” he said. “We cannot justify the use of policyholder money to pay a penalty when there has been no violation of law.”
Werfelman said that for two years New York Life has been performing searches of current in-force life policies against the Social Security Death Master File.
“We have also done a rigorous look-back, performing beneficiary searches on any of our life insurance policies that had been in force at any time since Jan. 1, 1992,” he said.
"To date we have performed Death Master File searches on over 12 million records," Werfelman said. "Once a match is found, we have robust procedures to proactively identify, locate and pay beneficiaries.”
He also noted that New York Life is among a group of leading life insurance companies that recently reached agreement with State Controllers' Offices around the country on this very issue. “The difference there was that the State Controllers saw no basis for a financial penalty,” Werfelman said.
He said that, “As more and more states have recognized, the appropriate way to address this issue is through uniformly applied new laws and regulations, not targeted enforcement actions against a few companies.”
“Our principal regulator, the New York Department of Financial Services—not known as a passive regulator—has thoroughly examined this issue and last year promulgated new regulations," he said. “The New York Department did not believe a penalty was appropriate. New York Life is in full compliance with those regulations and the company is following them nationally."
Matthew Anderson, a spokesman for the New York State Department of Financial Services, confirmed Werfelman’s comments.
"New York Life has worked with DFS to search for and pay out unclaimed benefits. We feel that they've done the right thing and fixed the problem,” he said.
A lawyer in Washington, D.C. who has been working on the issue for several years, said that insurers are dealing with two sets of regulators: unclaimed property administrators or treasures vs. state insurance commissioners. They are also working with two sets of agreements per company: a Global Resolution Agreement (GRA) with administrators/state treasurers and a Resolution Settlement Agreement (RSA) with insurance commissioners.
“Moreover, GRAs look backwards, RSAs look forward,” the lawyer said. The lawyer said there are two sets of independent auditors: Verus of Waterbury, Conn. and the Unclaimed Property Clearinghouse, a Xerox unit.
“The outside auditors make more money—10 percent to 13 percent on the GRAs—so they are more willing to work with state administrators/treasurers," the lawyer said. "State insurance commissioners are more difficult to please and have rejected a group settlement. Some commissioners are unwilling to listen to real issues, this is a difficult, complex situation.”
Originally published on LifeHealthPro.com
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