The Florida Office of InsuranceRegulation (OIR) today announced a multi-agency,multi-million-dollar settlement agreement with JohnHancock Life Insurance Co. The agreement focuses on thecompany’s business practices related to unclaimed property for lifeinsurance products and its use of the Death Master File. The DeathMaster File is a list of everyone who has died as reported to theU.S. Social Security Administration.

“Companies are using the Death Master File to stop companypayments for annuities—but do not use this same list to paybeneficiaries of people who have life insurance policies,” saidFlorida Insurance Commissioner Kevin McCarty. “Unfortunately, thisappears to be a pervasive industry practice. The Office appreciatesthat John Hancock stepped-up and agreed to change its processesbefore any other company. The agreement with John Hancock will senda strong signal to other companies to audit and modify theirpractices.”

Investigators said that this selective method of discerningDeath Master File information resulted in hundreds of thousands ofdollars in lost payments to beneficiaries. The investigationrevealed that there are instances when a policyholder died, andyears later the company has not paid the rightful beneficiary orremitted the benefits to unclaimed property. OIR believes thispractice may affect other insurance companies and insurancecompanies operating in other states; however, no agreements havebeen reached with other insurance entities.

While investigators said it is impossible to determine preciselyhow many John Hancock policyholders and beneficiaries were directlyand indirectly affected over the past decade, regulators anticipateHancock and other companies will ultimately pay tens of millions ofdollars to tens of thousands of beneficiaries nationwide as aresult of these examinations.

Hancock denied any wrongdoing, and asserted its intention toenter into the agreement is an effort to modify its future businesspractices. In the agreement, Hancock agreed to:

• Pay $3 million to the three agencies for settlement—$600,000 ofthis settlement has been waived due to the company’s ongoingcooperation.
• Return monies to beneficiaries, which includes interestpayments owed since the date of death. If a beneficiary cannot beidentified, the amount due will be reported to the UnclaimedProperty Division of the DFS.
• Establish a $10 million fund to facilitate payment tobeneficiaries that cannot be contacted.
• Provide quarterly reports to the Office, to the DFS and to theAttorney General for the next three years, updating informationspecific to Hancock’s implementation of the agreement.

OIR conducted the investigation along with the Office of Attorney General Pam Bondi and the Office ofChief Financial Officer Jeff Atwater’s Department of FinancialServices (DFS). The DFS has jurisdiction over unclaimed property.The investigation covered all of Hancock’s records during the timeit used the Master Death File, which lasted more than adecade.

“It is inconceivable that such large companies are unaware thattheir policies are cheating hardworking Floridians out of moniesthey’ve set aside to prepare for the loss of a loved one,” said CFOAtwater.

“The evidence to date reveals that the inexcusable policies andactions of life insurance companies have kept Floridians fromcollecting money they are rightfully owed,” Atwater continued. “Ibelieve this settlement sends a clear message that deceptivepractices will not be tolerated in our state and prevents furtherdelay in returning these monies to the rightful owners.”

CFO Atwater’s office has set up a Webpage for consumers to access information about the settlement,including contact information for the company.

OIR will conduct a follow-up market conduct review three yearsafter execution of the agreement.

The agreement with Hancock is the result of months ofnegotiations. California and other states previously reached anagreement pertaining to escheatment laws and unclaimed property.Florida’s agreement with Hancock is the first in the nation toresolve issues related to insurance practices in addition tounclaimed property.

Florida is chair of a multi-state National Association ofInsurance Commissioners (NAIC) task force investigating life andannuity claims practices. The primary charge of the task force isto coordinate the activities of state insurance regulators inpursuing investigations/settlements regarding possible unfairclaims practices. Other states on the task force includeCalifornia, Iowa, Louisiana, North Dakota, New Jersey, NewHampshire, Pennsylvania and West Virginia.

In cooperation with the NAIC task force, two state insurancedepartments have scheduled hearings. The Florida OIR will hold apublic hearing May 19 in Tallahassee. Metropolitan Life InsuranceCompany and Nationwide Life Insurance Company have been subpoenaedto appear. The California Department of Insurance, along with theCalifornia Comptroller’s office, will hold a hearing on May 23 inSacramento, Calif. This hearing will also cover the claimssettlement practice of Met Life. NAIC task force members will beattending both hearings.