NY regulators: insurers improving life payouts

Reuters News
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Posted: Dec 05, 2011 12:39 PM

NEW YORK (Reuters) - Insurance companies have paid out more than $52 million in claims since New York regulators asked them to explain how they used a government database of death records, the state's Department of Financial Services said on Monday.

Earlier this year the state's insurance regulator sent a letter to the 172 insurers licensed in the state, asking them for data about their use of the Social Security Administration's "Death Master" file.

Some insurers had been accused of using the file to stop making annuity payments to dead customers, but at the same time not using the file to verify whether life insurance customers had died as well.

Insurers have made nearly 8,000 payouts already as a result of the department's investigation, the state said, and another 28,000 matches have been made and led to the claims process being opened.

In one case, a payment was made for someone who died more than 40 years ago. The largest payment was nearly $700,000, while the average payment was anywhere from $2,800 to just over $36,000, depending on the type of policy.

In early October MetLife, the largest U.S. life insurer, said it would take a charge of up to $135 million to adjust reserves for Death Master-related cases where it may have to make claims payments.

(Reporting By Ben Berkowitz, editing by Dave Zimmerman)