This money will go to the U.S. states involved in the massive disputes.
According to the finance office in California, American International Group (AIG) will be making payouts totaling over $300 million in order to settle a dispute with several different states regarding unclaimed life insurance payments.
The payment will be split among 39 different U.S. states as well as Washington D.C.
This single agreement regarding property that remained unclaimed from AIG will require the life insurance company to pay more than $300 million that is owed on a tremendous number of claims. This, according to a California State Controller’s office spokesperson, Jacob Roper. California’s portion of this payout is estimated to be somewhere between $25 million and $30 million.
This is beyond another life insurance settlement earlier this week in which AIG will be paying $11 million.
That separate settlement will involve payments to insurance regulators and was announced in Monday’s life insurance news.
AIG is not alone as a life insurance company that is now making huge changes to the way that its life insurance claims are to be handled. A similar trend has been occurring throughout the sector of the industry. Just last week, a settlement with state insurance regulators by Nationwide caused that insurer to have to make payments totaling approximately $7.2 million, for a similar reason. Prudential and MetLife have also made similar forms of arrangements earlier this year.
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According to the New York City based life insurance company, the separate $11 million settlement will be used by the state agencies in order to help cover the cost of monitoring payout behaviors.
These agreements will now require that life insurance companies check their own policy files against Social Security Administration data regarding deaths. If the insurers are unable to locate a beneficiary and the property remains unclaimed, then the funds that would have been due to that individual will be handed over to the states.
This is the outcome of a joint life insurance investigation performed by state regulators which began at the start of 2011, following allegations that companies were holding back the unclaimed payments.