Regulatory efforts on the part of numerous agencies at both the state and federal levels in the last few years have focused particularly on various parts of the insurance industry, and just such an initiative in New York recently resulted in a number of life insurance companies having to turn over more than $1.1 billion in unclaimed life insurance benefits.
A massive amount of unpaid or unclaimed benefits for more than 100,000 people across the country recently turned up as a result of New York's ongoing efforts to help consumers nationwide collect insurance benefits they should have received in the past, according to a report from the state's Department of Financial Services.
Benjamin Lawsky, the New York Superintendent of Financial Services, praised the insurance industry for working with the agency in assisting in the investigation, which could come as a boon to many consumers across the country. Similarly, Gov. Andrew Cuomo noted that the discovery would be a boon for thousands nationwide.
"As a result of this aggressive investigation, we have recovered hundreds of millions of dollars in life insurance benefits for thousands of families across the nation - including more than 25,000 New Yorkers," Cuomo said. "Going forward, we will continue these efforts to ensure consumers get every single penny they are entitled to."
The reason there may have been so much in the way of unpaid life insurance benefits is that insurance companies were not necessarily always using Social Security Administration lists of recent deaths to confirm that any of the deceased were policyholders, the report said. However, these lists were often checked when it came to payments on annuities, so that these could be discontinued as soon as the recipient passed away.
Of the $1.1 billion discovered by the investigation, about $812 million was specifically for direct payments made to some 113,000 people across the country, with an additional $339 million set aside for situations in which beneficiaries could not be found right away, the report said. The latter type of money will be moved to "escheatment," meaning that states will take it from the insurance companies until a beneficiary can be located.
Life insurance and annuity issuers may want to take a more proactive approach of using SSA death lists to better safeguard themselves against the possibility that they'll run afoul of state or federal regulatory agencies as a result of this kind of issue.