Florida cracking down on life insurance companies

Florida, along with other larges states like California and New York, is making sure that insurance companies are regularly searching for unclaimed death benefits. After reaching a settlement with five major life insurance companies in 2011-12, where the companies were forced to hand over 75 million of unclaimed death benefits, the state of Florida has helped find the beneficiaries of nearly 15 million of the unclaimed benefits.

So far, Florida has discovered about 96,000 unclaimed life insurance policies, totaling more than $75 million, from five major life insurance companies, according to a report from the Miami Herald. The majority of these policies, though, are industrial policies sold decades ago worth less than $1,000 each . However, there may be  similar revelations involving other insurance companies in the near future, as state insurance commissioner Kevin McCarthy noted that Florida is part of a group of states that could find an additional $3 billion in unclaimed policies with 40 insurers.

In the last three years, Florida has  paid out on more than 10,000 unclaimed policies with an average payout of $1,450, the report said. The beneficiaries on those accounts are tracked down by the state in a number of ways, including through advertisements and listings on state websites and sending out notices.

Insurance companies are required to perform regular searches of the Social Security Death Master File to attempt to find deceased policyholders where no death benefit has yet been paid.  When insurance companies are unable to locate the beneficiaries of the deceased insured, they must instead turn that money over to the state. For those who believe they might have life insurance benefits coming to them, they can claim the funds at any time, the report said. Florida even has a number of policies to pay out that date back to the 1940s. However, those expecting a massive windfall might do well to temper expectations: only about 2,000 of the 96,000 currently unclaimed policies are worth more than $5,000, and of those, just seven are worth more than $100,000.

Because of these crackdowns by state governments, insurers themselves should do more to make sure they are regularly and properly verifying whether the insured's on policies they've issued have died. Failure to do so could bring down added scrutiny from state regulators.