A probe into the practices of life insurers has revealed one state may have been lax in reaching out to consumers to let them know they may be owed money.
According to an investigation by the Dayton Daily News
, the state of Ohio has collected $7.1 million in settlements from insurance companies since a 2009 probe beginning in Florida started investigating how large insurers handle billions of dollars meant for beneficiaries that are difficult to locate. Despite the high sum, however, the state has done little to identify how much insurers have paid directly to residents.
Since the national probe was launched, about 20 insurance companies have paid to settle with states and seek beneficiaries for payments. No wrongdoing was admitted, however.
Ohio Department of Insurance spokesman David Hopcraft said the department has sent no notices to the public or potential beneficiaries about settlements with the state.
“The department is mindful that the companies involved did not violate Ohio law in this matter and has let the issue find its resolution through the effort led by Pennsylvania and Florida as lead negotiators,” Hopcraft said.
The probe has revealed that many life insurance companies, including some of the largest brand-name companies in the country, pay on policies only when a claim is filed. Beneficiaries, however, are not always aware they are owed life insurance payments and companies are accused of not making adequate attempts to find them.
For example, while insurers used the Social Security Administration’s Death Master File to terminate payments under annuity contracts, they did not use the same information to pay beneficiaries.
The results of the national probe and the newspaper investigation have some lawmakers calling for the state to re-examine its process to ensure beneficiaries are being paid what they’re owed.
Consumer advocates have also joined the cause.
“It’s hard to imagine why the Department of Insurance would keep this under the cloak of darkness,” said Catherine Turcer, a policy analyst with government watchdog group Common Cause Ohio.
“Beneficiaries need to have information, and not everybody knows they are a beneficiary. A discussion about what the Department of Insurance is doing to help people get their money is essential.”