A Texas funeral policy company must pay out $25 million to its customers.
A recent settlement in California has made insurance news as it has caused an insurer based in Texas to have to issue payments of $25 million in funeral policies to its customers.
Officials in California have just reached this agreement with Forethought Group Inc.
Forethought Group is a financial planning company and insurer that has been selling end-of-life and retirement planning. It underwent an audit in 2008, which identified an issue with the processes of the company, where it was not making its benefits payments in a timely way.
This insurance news has resulted in a settlement that will bring a massive payout to customers.
California state controller, John Chiang, has estimated that the payments that will be made by Forethought to its funeral policy customers will be worth nearly $25 million. The customers who will be involved in this insurance news are California beneficiaries who have made claims against their policies but whose payments either had not been made at all, or whose payouts did not arrive in a prompt fashion.
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The controller’s office also added to this insurance news by saying that the company will also need to implement reforms that will make certain that its future benefits payouts will be made in a prompt and timely way. This will stop this issue from continuing or returning following the payment of the settlement.
Forethought has also been required to pay an additional 3 percent compounded interest on the value of the amounts that have been held ever since 1995, or from the date that the policy owner died. This additional penalty has been applied in order to compensate for the company’s failure to comply with the laws in the state involving unclaimed property.
This insurance news isn’t entirely unique within the industry, nor within California. Chiang’s controller’s office has also reached previous agreements with other insurers for a similar reason. For example, the recent settlements with Prudential Insurance, John Hancock, and MetLife were worth a total of $135 million. It is Chiang’s hope to get this practice under control and to prevent it from happening in the future.