MetLife isn't the Hindenburg
By Steve Savant
Ash Brokerage Corporation
When several state regulators alleged deliberate neglect of paying death claims, MetLife — previously without a tarnished image — immediately took action to maintain public confidence.
The first time I saw the Hindenburg, it was on the cover of a Led Zeppelin album. Led Zeppelin is still ranked, by headbangers, as the world’s undisputed heavy metal band of all time. The band’s public relations and branding were brilliant.
Just thinking about the Hindenburg on the album cover reminds me of MetLife’s blimp — the most recognized blimp in the world because of its famous animated pilot Snoopy, the WWI flying ace of Charlie Brown fame. The blimp covers over 70 televised events a year, so MetLife has huge exposure. You don’t break with a winning formula. It is one of greatest branding campaigns of all time, and the most guarded.
The brand is carefully managed, highly protected and has great report with consumers. So when several state regulators alleged deliberate neglect of paying death claims, MetLife — previously without a tarnished image — immediately took action to maintain public confidence.
MetLife is just the most recent insurer to settle with state agencies, preceded by other settlements with Prudential and John Hancock.
MetLife appears to have agreed to payments near $438 million spread over the next 17 years and $188 million to beneficiaries before year’s end. Somewhere around $40 million is going to California alone. California Controller John Chiang estimates 30,000 MetLife policies will be affected.
MetLife is the largest life insurance company by admitted assets, with nearly a third of $1 trillion and a total in force business of almost $3.5 trillion. With financial strength like that, the settlement is like emptying my swimming pool into the Atlantic Ocean. That is a behemoth balance sheet.
Regulators concluded that when MetLife was aware of policyholders who died, it often didn't make payments to beneficiaries. Ninety-nine percent of MetLife’s submitted death claims go through processing without a hitch. I can’t fathom any quality carrier intentionally withholding beneficiary proceeds. If senior management knew of this and suppressed those types of goings on, their brand would suffer irreparable damage.
It’s difficult to believe these accusations. Perhaps MetLife became so big and bureaucratic that claims administration was overwhelmed? But the deliberate nonpayment of death claims? I’m not buying it.
Chiang's office said MetLife didn’t forward the funds to the state controller's office as required by law. That happened. But that assumes the funds were not forwarded on purpose. Am I that naïve?
Insurance regulators from several states accused the company of delaying (that also could happen) or withholding life insurance claims from policy beneficiaries. That would be unconscionable. It would be a PR disaster beyond the level of AIG. We want to "make it clear that if the industry isn't willing to make the payments legally required, we will take action, including lawsuits, to compel them to do right by their customers," Chiang said. Not willing to pay death claims? Really? Is MetLife’s promise to pay just hot air? Am I too close to the blimp? Am I just too close to the insurance industry?
Regulators also said that MetLife failed to thoroughly use the Social Security Administration's database of deceased individuals, known by laymen as the Death Master File. I just love this title Death Master File. It reminds me of Halloween.
The Death Master File, commercially know as the Social Security Death Index, is part of the Numident computer database of the United States Social Security Administrations database file. Early in 1961, the files were computerized with data back to 1936. I can’t imagine how colossal those computers were back in the day.
The Death Master File is a public document under the Freedom of Information Act with regular updates sold by the National Technical Information Service of the U.S. Department of Commerce. Close to 95 percent of deaths that occur are reported to the Death Master File, but not 100 percent. And remember, this is a government run agency, so accuracy may be an issue.
Regardless, MetLife agreed to periodically sweep their administrative records against available external sources such as the Social Security Death Master File as a best practice protocol, as well as implementing a monthly name matching process.
"The company has been working with regulators to develop industry best practices and is pleased to announce new processes that will provide an even stronger safety net for the limited number of beneficiaries who do not submit a claim to the company in the normal course of business," the company said in a statement.
All in all, I’m not worried about MetLife’s reputation suffering much past a couple more weeks. MetLife isn’t the Hindenburg. The public will still look to the skies, see that adorable dog on the MetLife blimp and keep taking pictures. And MetLife will keep paying claims.