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WASHINGTON — The Minnesota Department of Commerce has initiated a crackdown on the policies and claims administration practices of insurers doing business in the state.
The crackdown followed market conduct exams over the last several years that found inadequacies in the companies’ policy and claims administration practices dealing with claim payments as well as the state’s unclaimed property laws, according to Ross Corson, a spokesman for the Minnesota agency.
The Minnesota action is among a number of developments on the unclaimed property front.
For example, four smaller insurance companies have filed suit against Florida’s new unclaimed property law, claiming it violates Florida’s constitution by requiring them to search their files for potential unclaimed life insurance or annuity policies issued as far back as 1992.
And, the National Association of Insurance Commissioners (NAIC) is continuing its efforts to draft a new model law dealing with the issue in an effort to get nationwide uniformity. A conference call to glean industry and regulator feedback on an exposure draft of the proposed model law will be held Friday. The NAIC last year made a new model law on the issue a priority, and created a task force to work on it. Meetings have been held periodically on the issue since last May.
The National Council of Insurance Legislators (NCOIL) has recently developed a model law, and is also in the process of working with interested parties to revise it.
As far as Minnesota, Corson said that the state’s agency has reached settlements with nine life insurance companies: AXA, Jackson National, John Hancock, Lincoln, MetLife, New York Life, Prudential, Transamerica and Voya. Currently, Corson added, the Minnesota agency is auditing seven additional life insurance companies.
He said the audits are needed to ensure that benefits are paid out in a timely manner in accordance with Minnesota insurance laws. The examinations have also found issues regarding the adequacy of companies’ policies and procedures related to reporting and remitting unclaimed property.
Corson added that, in addition to having the companies reform their practices going forward, Minnesota’s priority has been to get the companies to fulfill their responsibility to pay the unpaid benefits directly to beneficiaries.
He acknowledged that, if the beneficiaries cannot be located, then the funds are transferred [to the state] as unclaimed property.
Corson said that, to date, of the more than $174 million in unpaid benefits identified in the nine settlements reached by Minnesota, $143 million has gone directly to beneficiaries or their heirs.
Not all of this unclaimed property has gone to the State of Minnesota.
“While the policyholders were Minnesotans,” Corson said, “the beneficiaries sometimes were residents of other states — and, thus, their unclaimed property would go the state of last known address.”
See also:
Change in policy on unclaimed property
ING settles in 7 states on unclaimed property
Unclaimed property class action suit dismissed
Aviva and Midland in unclaimed property deals
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Minnesota eyes unclaimed property issues
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