New York’s Department of Financial Services found some life insurance companies failed to pay out policies when the beneficiaries failed to make a claim, according to a news release from Gov. Andrew Cuomo.
Some 7,525 New Yorkers are finding out they inherited assets, resulting in 32,715 payments nationwide totaling $262.2 million to beneficiaries who didn’t know their family member had a policy to claim. The awards added up to $95.9 million in New York State alone.
The DFS investigation found that many insurance companies did not use the U.S. Social Security Administration’s Death Master File, a list of recent deaths, to pick out policyholders who had died and whose beneficiaries were due payments. The state subsequently ordered insurers to check their policy rolls against the file.
More payments may be on the way. Insurers have reported cross-checking about 89.58 million records, but they are still examining over 445,000 potentially unpaid claims.
“This investigation makes it perfectly clear that something must be done to make sure families across New York receive the life insurance benefits that they are due," Governor Cuomo said. "In the wake of this investigation, New York will now mandate that insurance companies actively search the list of recent deaths so money will be paid to beneficiaries instead of being trapped in limbo and a new website will help families search for lost or forgotten policies."
“There is simply no reason why insurance companies shouldn’t be scrubbing their policy lists with the death-index database on a frequent basis,” DFS Superintendent Benjamin Lawsky said. “Running these computer matches isn’t much of a burden, and the benefits to consumers are significant.”
Insurers will search their records to determine the existence of a life insurance policy or annuity contract. The insurers will then electronically report the search results to DFS within 30 days, and DFS will notify requestors whether or not a policy has been identified by any licensed insurer. If a policy is identified, the insurer will begin the claims process for paying proceeds to beneficiaries.
Edited by Braden Becker