Government acknowledges major issues with Death Master File

The Social Security Death Master File has been a source of some consternation within the life insurance industry for some time now as a result of issues stemming from the ways in which it is updated. However, new data from the federal government shows that many of these might be problematic at a baseline level for the Social Security Administration.

The Government Accountability Office recently issued an acknowledgement that, after a thorough review, it found numerous problems with the SSA's Death Master File that could prove extremely problematic for consumers and life insurance issuers alike, according to a report from Life Health Pro. Specifically, the GAO said that the list's issues often relate to the ways in which SSA collects, verifies and maintains data about Americans who have died, and all of these problems typically lead to death information that is at least untimely, if not in some ways inaccurate. Perhaps the most egregious of these is that the agency does not independently verify all reports of a person's death before putting them into the DMF, meaning that an inaccurate report of an incident could lead to major problems for both a person and the insurer issuing his or her life policy.

What does this mean for the industry?
Of course, one of the biggest reasons the Death Master File has been in the news so much in recent years is that state regulatory agencies have been going through the data contained therein as a means of finding potential areas in which life insurers have erred in not issuing funds to beneficiaries of those who have died, the report said. But, with this revelation, it seems that there may be problems on the other end. Further, it should be noted that in early December, the National Association of Insurance Commissioners agreed to review the ways in which states were going to be able to comb the DMF and reach settlements with insurers it finds to be potentially withholding funds from beneficiaries.

Life insurance issuers should keep close tabs on the ways in which these potential issues are handled going forward, as a means of making sure that they are completely aware of and compliant with any potential changes to the rules related to the ways they access and make use of information listed in the Death Master File. This might include changes at both state and federal levels, and any discrepancies could create potential headaches going forward.