Insurance Department reaches settlement with Prudential Insurance
Posted on 2/22/2012
Company will improve business practices to identify life insurance beneficiaries after death
BISMARCK, N.D.-North Dakota Insurance Commissioner Adam Hamm announced today that the North Dakota Insurance Department is one of seven lead states that have entered into a multi-million dollar settlement with Prudential Insurance Company of America.
The lead states--North Dakota, California, Florida, Illinois, New Hampshire, New Jersey and Pennsylvania--conducted a multi-state examination of the company to investigate Prudential's use of the Social Security Administration's Death Master File (DMF) to locate information about deceased policyholders. Life insurance companies commonly use the DMF to find out if policyholders of certain types of insurance have died.
The multi-state exam looked at how Prudential used information from the DMF to stop annuity payments to deceased customers and to pay benefits to life insurance beneficiaries. The exam revealed that while Prudential used DMF information to stop annuity benefit payments to deceased policyholders, it did not have the same practices in place to identify beneficiaries who may be eligible for life insurance payments following the death of a policyholder.
"Prudential has agreed to change its business practices and to make an effort to locate beneficiaries who may be entitled to life insurance payments following the death of a policyholder," Commissioner Hamm said.
The agreement includes a commitment by Prudential to build a system that will help identify when a customer has died, locate beneficiaries and make payments. Prudential is also responsible to pay $17 million for examination, compliance and monitoring costs. The $17 million will be shared by all states that sign the settlement agreement. The agreement became effective after it was signed by 20 states.
Commissioner Hamm added that this settlement is due to the collaborative effort of state insurance regulators across the United States, which demonstrates the strength, importance and collaborative nature of state-based insurance regulation.
Consumers with questions about the settlement are encouraged to call the Department at 1-800-247-0560.