The New York Department of Financial Services has begun an investigation into the state’s life insurance industry. The investigation seeks to account for the $52.6 million in unpaid benefits that has been missing for the past several months. The money has yet to reach the 8,000 beneficiaries to which it is owed. Shortly after the investigation was announced on Monday, the money quickly made its way to beneficiaries, which has sparked concerned amongst the state’s insurance regulators.
In accordance with the investigation, the state’s life insurance companies are required to provide regulators with all the data they have at their disposal regarding policyholders that have passed away. Thus far, the investigation has already unearthed 28,000 claims that have yet to be processed and another million that may require further investigation. According to regulators, many companies do not use information from the U.S. Social Security Administration’s master death list, which may be one of the reasons for the discrepancies.
Insurers say that there are many reliable ways to determine when a policyholder has passed away. John Calagna, a spokesman for MetLife, one of New York largest life insurance companies, says that the company usually learns of the death of its policyholders through relatives and reports from funeral homes.
Regulators have tasked the state’s life insurers to issue monthly reports regarding benefit payments for six months. At the end of the investigation, if not all discrepancies are solved, regulators may take action on the insurance industry by adopting more aggressive policies concerning life insurance claims.