In recent years, there has been a greater effort at the state level across the country to help identify unclaimed life insurance benefits and distribute them to consumers within their borders. Now, two such recent efforts will net residents of the state of New Hampshire nearly $4.5 million in total above and beyond the benefits that might have been owed to them.
The state recently announced that its portion of the settlements, which were reached between two major life insurers, will soon be reaching the pockets of consumers in whose name those benefits were meant to have been issued, according to a report from the New Hampshire Insurance Department. In addition, the companies will also compare their records to the U.S. Social Security Administration's death master file to confirm when policyholders have died, and whether funds should be distributed to their beneficiaries when possible.
Often, what happens in these situations where life insurance benefits are not distributed, is that people named in those policies aren't aware of them in the first place, which can complicate the claims process, the report said. In recent years, examinations of life insurance companies' records have turned up more than $1 billion in unclaimed benefits.
What does this agreement mean?
The life companies' settlements means that the $4.5 million or so will be deposited into the state's general fund, the report said. New Hampshire insurance commissioner Roger Sevigny noted that in reaching these agreements, those firms have "done right" by residents, and have voluntarily accepted additional reforms to help ensure that this kind of issue doesn't arise again in the future. This effort was part of a multi-state investigation that also included the insurance departments from California, Florida, Illinois, North Dakota, and Pennsylvania. All other states were invited to participate as well, but the deal will not be completed until 20 have signed on.
Certainly this kind of action on behalf of many state regulatory agencies is something that life insurers will have to monitor closely going forward. The more they can do to stay on top of cross-referencing their own policies with the SSA's death master file, the less likely they will be to run afoul of government agencies attempting to determine whether there was any wrongdoing involved in these oversights. Full cooperation in this regard may help companies avoid future issues related to regulatory overreach.