Similar to MetLife’s recent settlement in April 2012, American International Group (AIG) has agreed to pay more than $300 million to settle claims from state insurance commissioners on their life insurance benefits. Multiple states, lead by California, Florida, Illinois, New Hampshire, North Dakota and Pennsylvania, have been investigating AIG’s company practice of handling “unclaimed” life insurance benefits since 2011 and were not happy with what they found.
AIG, similar to MetLife, frequently reviews the Social Security Administration’s list of deaths in order to update the status on various types of claims. However, the group of investigating insurance commissioners believe that the insurance company should be using this exact same information in another way.
According to the agreement, AIG is now required to compare the list of deaths provided by the Social Security Administration with their list of life insurance policyholders. If a claim for life insurance benefits is not filed after the death of an AIG life insurance policyholder, AIG is responsible for trying to locate the name beneficiary(ies) in order to pay the benefits. If AIG is unable to locate the beneficiary stated in the life insurance policy, AIG is supposed to hand the unclaimed money over to the state.
Along with the $300 million in settlement that is to be distributed among the 39 participating states and District of Columbia, AIG has agreed to pay an additional $11 million to insurance regulators to help fund monitoring efforts by state insurance agencies.
AIG and MetLife are not the only life insurance providers to be slapped with a huge bill for their deceptive practices. Prudential and Nationwide are two other powerhouse insurance companies that have made similar agreements with the insurance commissioners in charge of this investigation. Earlier this month, Nationwide agreed to pay $7.2 million in a similar settlement.
How will these settlements affect the future of life insurance policyholders and beneficiaries? The hope is that insurance companies will now be held responsible for paying the benefits policyholder have been loyally paying premiums on for years. Beneficiaries who are unaware of life insurance policies they are eligible to receive benefits from now have a greater likelihood of recovering these benefits.
If you believe you should have received life insurance benefits from insurance company as the beneficiary, contact Grabhorn Law for further assistance.
Source: AIG Will Pay $300M to Settle Life-Insurance Probe – ABC News – http://abcnews.go.com/Business/wireStory/aig-pay-300m-settle-life-insurance-probe-17537776