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Ultimate Irony- Major Life Insurance Firms Settle with State AG’s

ilene's picture




 

Ultimate Irony- Major Life Insurance Firms Settle with State AG’s 

Courtesy of Dr. Paul Price (at Real Money)

MetLife, Prudential and John Hancock agreed to pay $40 MM, $17 MM and $12 MM respectively to make a multi-state probe go away.

These companies were routinely cross-checking Social Security death records to prevent recurring annuity benefit payments going out to deceased policy holders. That seems fair and logical. In fact, SS itself has been criticized for wasting huge sums sending out checks to dead people.

What was the focus of the probe then? These companies did not voluntarily use this same data to offer death benefits to heirs of life insurance policies. Benefits were paid only if a claim was filed. That was standard operating procedure and perfectly legal, if not a really savory business practice. Do you pay your personal bills if they are never presented to you? 

Florida’s insurance commissioner said it was a landmark settlement in terms of the amount of money ($400 MM) being paid out to consumers. Now that the largest firms have settled, many smaller companies are being targeted for the same practice. 

Here’s where the irony comes in. 

The Wall Street Journal said the probes started when an ambitious, minor league auditing firm approached several cash-strapped states with the idea that they could seize these unclaimed life policies as ‘abandoned property’. 35 states signed up for this cash grab, contracting with Verus Financial LLC and promising them a cut of their eventual take. 

The states, now calling out the insurance companies for failing to seek out rightful beneficiaries, were looking to take these unpaid death benefits for themselves- not consumers. 

It is unclear when the decision to switch up to the more altruistic purpose was made. Perhaps someone involved finally grew a conscience. 

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Government agencies looking to confiscate other people’s money apparently are not at all unusual in today’s world. I was surprised to find clauses in the fine print of every on-line bank account telling depositors that if they didn’t access their accounts for just 12 consecutive months that the entire balance would be turned over to their home state under that same abandoned property clause. It’s easy to think that savers, especially those with multi-year CDs would have no reason to keep checking on their accounts. Heirs of account holders that died might not even know these accounts existed.

Poof, all your money could be taken away without notice by either your bank or your home state. 

Similarly, many states are now confiscating unused gift or prepaid card balances as soon as two years after purchase. AMEX and some other firms are rebelling against New Jersey’s requirement to have buyers of their prepaid cards give zip codes- allowing NJ to lay claim to any dollar amounts not used promptly.

It appears that governments can take consumer value without hesitation even as they accuse private industry, and extort fines from them, for doing exactly the same thing.

 

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Sat, 04/28/2012 - 12:05 | 2382290 givehonestyashot
givehonestyashot's picture

Simple to see drive down a highway in USA look at the size of the buildings that are used to house a few Insurance companys.

If your doing something that need risk coverage, you may think about changing it?

Not changing the insurance model was and is a fools game in the USA

 

And don't get fooled with CAR insurance, that is a politician give away to the Insurance company's a gift and fool the masses into thinking they are ok..

The minimum requirement which everyone has to buy, isn't competitive because its forced(forced need to buy to get license)  will not cover a real medical emergency.
So the tax payer ends up paying the hospital.
The Insurance Crooks  make out and pay the campaign contribution and lobby for laws.

Winners:= Politicians, Insurance company.

Losers or ripped off: = Pretty much the rest of  us.

GH

Fri, 04/27/2012 - 11:27 | 2380285 De minimus
De minimus's picture

There are not words. Well at least not printable words.

You can obviously look for fairness and justice and ethics and morality somewhere other than the United States. Just in case there was any doubt, since these people are in fact thieves and no doubt their appetites will increase for this sort of activity, you are free and clear to do what ever you want and can do to protect yourself and family from them.

If you don't, you will have nothing left, they will take it all. Legally.  After all, the courts take a long time to resolve any matters especially involving government, and the judges are appointed by them and it is increasingly obvious that they represent everybody but you.

Fri, 04/27/2012 - 09:51 | 2379993 asteroids
asteroids's picture

Most insurance is a scam. Car insurance is unfortunately necessary. Life insurance is a waste. We ALL die eventually.

Fri, 04/27/2012 - 07:15 | 2379567 Dr. Sandi
Dr. Sandi's picture

I don't see what's surprising about this. Government's only real job throughout history has been to take our stuff and give it to somebody more deserving.

In order to do that, they first have to TAKE OUR STUFF!

Fri, 04/27/2012 - 06:58 | 2379543 ReeferMac
ReeferMac's picture

Another shininig example of why this country is doomed.

Fri, 04/27/2012 - 04:36 | 2379451 ebworthen
ebworthen's picture

The Kleptoligarchy marches on.

It is getting to the point where there is no point for insurance anymore.

Fri, 04/27/2012 - 08:07 | 2379627 Widowmaker
Widowmaker's picture

Insurance is fucking toast. Its a fucking racket and has always been a racket. Yeah, let me spread risk and then have the taxpayer make it all go away anyway. Double win for insurance fags, double loss for the individual.

What a fcking sham with none other than Uncle Sam right in the middle.

Save a country, eat a faggot in pinstipes.

Fri, 04/27/2012 - 03:37 | 2379403 I_Am_
I_Am_'s picture

Is there nothing sacrosanct........?

Fri, 04/27/2012 - 04:37 | 2379452 ebworthen
ebworthen's picture

1.  Banker Bonuses.

2.  Politician Pensions.

Fri, 04/27/2012 - 05:34 | 2379477 I_Am_
I_Am_'s picture

Whoooops forgot those and how true..Cheers!

Fri, 04/27/2012 - 02:30 | 2379350 anonnn
anonnn's picture

Just a heads-up example for perspective on Life Insurance Co.s.

 IIRC, The VietNam war produced produced many MissingInAction cases.

 Insurance companies insisted family members of MIAs continue the payment of premiums under threat of the Life Insurance policies lapseing [non-payment of premium; premiums already paid go instantly into insurer's pocket].

Any 'paid-up" [E.g.,Whole Life] policies simply went into free-money-limbo of no death-payouts as long as MIA status persisted. "As long as" meant lots free money, you see? All predicated that a final resolution of possible "death" had to be established and only the US Gov could do that. It was even complicated by the fact that Congress never declared War.

 Meanwhile, the insurers simply had free use of the monies as long as there was no resolution of the MIA-status, and would avoid the large payouts for the actual or officially-declared deaths.

 An MIA-Family organization was created  whose members had no idea the founders were the insurance companies. Such organization was covertly guided to (1) organize the MIA-families so that (2)  MIA-family efforts to enact Congressional legislation to resolve the MIA cases would be derailed or delayed as long as possible.

I do not know if those practices continued. IMO at least into the late 1980s.

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