Prudential Settles with Florida, Others in Handling of Death Benefits

State insurance regulators have finalized a settlement with Prudential Financial over its handling of death benefits from life insurance policies.

According to a release from the Florida Office of Insurance Regulation, Chief Financial Officer Jeff Atwater and Attorney General Pam Bondi, Prudential has agreed to improve its practice of identifying deceased policyholders in order to pay beneficiaries.

Under this agreement, Prudential has committed to building a system to match inexact data, to search for beneficiaries if they find a match, and to do these matches more often, a release from the Office of Insurance Regulation stated.

Florida was joined by California, Illinois, Pennsylvania, New Hampshire, New Jersey, and North Dakota in signing the agreement. At least 20 states must sign the agreement. States have until March 31 to sign the agreement to become eligible to receive the distribution of the $17 million settlement.

As part of the agreement, Prudential agreed to:

Overhaul its computer system and revise its business practices to better utilize the Social Security Administrations Death Master File to identify life insurance beneficiaries.

Pay a national $17 million settlement payment.

Return monies promptly to beneficiaries when located through revised search efforts.

If a beneficiary cannot be identified, the amount due will be reported to the Unclaimed Property Bureau of the Florida DFS or the appropriate state unclaimed property office in accordance with state laws.

Provide quarterly reports for the next three years to the Office, DFS and the AG with updates on information specific to Prudentials implementation of the agreement.

Insurance Commissioner Kevin McCarty:

I appreciate the cooperation of Prudentials senior officers and regulatory compliance professionals for their work to help regulators identify beneficiaries, and to take steps proactively to implement procedures to more effectively pay claims and remit funds to the Division of Unclaimed Property.

Based on hearings conducted in May 2011, we know that the failure to search for beneficiaries even though the company has access to death information is a pervasive industry practice. The Office will move vigorously to ensure that other companies also revise their business practices to ensure beneficiaries are given all the life insurance proceeds to which they are entitled.

Chief Financial Officer Jeff Atwater:

As a public official, I have a deep responsibility to ensure that companies doing business in our state are playing by the rules and honoring the contractual obligations they have made with their customers.

"As such, this landmark settlement with Prudential will make certain that Floridians get the dollars they are owed plus interest earned for the time the insurer held the payment. It will also require the company to improve its policies to protect policyholders from being systematically defrauded out of the dollars theyve set aside to prepare for the loss of a loved one.

Attorney General Pam Bondi:

"Life insurance companies should devote the resources necessary to find beneficiaries and make payments in a timely manner, and this settlement is one more advance in changing industry practices to protect rightful beneficiaries."