AIG to Pay Minnesota Regulators $2.4 Million to Settle Examination Over Payments to Beneficiaries
November 28, 2017 by Thomas Harman
SAINT PAUL, Minn. – American International Group has reached a settlement agreement to pay $2.4 million to the Minnesota Commerce Department and improve its use of the U.S. Social Security Administration’s Death Master File in order to make timely payments to beneficiaries.
The settlement is the latest of 13 resulting from Commerce Department market conduct examinations to identify unpaid life insurance policies and annuities owed state residents.
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The settlement said the Commerce Department investigation found issues regarding the adequacy of AIG’s policy and claims administration policies and procedures needed to ensure life insurance and other funds are fully investigated and paid in a timely fashion. According to the settlement, AIG denies any wrongdoing and has implemented new policy and claims administration policies that address the department’s concerns. The settlement said the agreement was made in order to avoid the possibility of costly litigation or administrative proceedings resulting from the probe. An attempt to gain comment from AIG was unsuccessful.
As part of the business reforms set in the agreement, AIG agreed to compare on a monthly basis its records with the Death Master File for Minnesota-related policies, annuity contracts and retained asset accounts that were in force between Jan. 1, 1990, and Aug. 1, 2014. AIG also agreed to make similar comparisons for Minnesota-related policies, annuities and retained asset accounts that were either active in the year the Death Master File comparison is performed or in the three years prior to the year the comparison is made. AIG must also compare its records to the complete Death Master File annually, according to the settlement.
The latest settlement involves AIG affiliates American General Life Insurance Co., the Variable Annuity Life Insurance Co. and the United States Life Insurance Company in the City of New York.
The Commerce Department said its market conduct examinations showed the insurers had inadequate information for identifying policyholders and beneficiaries who may be owed benefit payments, including failure to match policy records with the Death Master File. Under the terms of the settlements, the insurance companies now must take additional steps to maintain accurate information, use the Death Master File and make timely payments to beneficiaries.
The 13 life insurers have reached agreements totaling $226 million either paid to beneficiaries or put in unclaimed property programs. The insurers have also paid a combined $17.7 million to the state, including the $2.4 million by AIG in the new settlement. Department investigations of claims and payment practices at several life insurance companies continue, the Commerce Department said.
The American General Life Insurance Co., the Variable Annuity Life Insurance Co., and the United States Life Insurance Company in the City of New York all have current Best’s Financial Strength Ratings of A (Excellent).
(By Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com)