John Hancock Life Insurance Settles Dispute with States
John Hancock Life Insurance
Co. has agreed to settle disputes over their policies and annuities with a group of over twenty states. The agreement follows an audit by 35 states alleging mishandled life insurance policies and annuities payments.
In the agreement released by the California State Controller’s Office
, the company vows to improve their claims practices. The most egregious errors, according to the California Controller, involve the mishandling of policies of deceased individuals. In one case, the comptroller claims Hancock had not paid the beneficiaries of an individual who passed away over seven years ago.
In California, the law states that insurers must report to the Controller’s office once an account has gone dormant for three years. The Controller then follows the account back to the property and the beneficiaries. According to the Controller the practice of avoiding paying out death benefits is rampant amongst insurers.
John Hancock will restore the value of over 6,400 accounts in California, paying out over $20 million in death benefits. Hancock is the first company to settle out of 21 insurance companies named in the audit.
In the settlement, John Hancock refutes any allegations of wrongdoing, stands by its history of high standards and commitment to customers, and promises to improve procedures beyond the legal requirements and will begin to actively research the status of inactive accounts.
Meanwhile, the State of Florida
will hold a hearing in May to determine whether or not insurers can use a Social Security database to learn if their policyholders have died. State law does not require insurers to proactively search databases, but questions remain as to their necessary course of action once a deceased policyholder is identified.
Florida has subpoenaed two insurers: Nationwide Financial Services Inc. and MetLife Inc. to take part in their May hearing.