Michigan is one of forty states that have to date joined in a $40 million settlement agreement with Metropolitan Life Insurance Company ("MetLife") over allegations that MetLife asymmetrically used the Social Security Administration's Death Master File ("DMF"), avoiding the discovery of names of its deceased life insurance policyholders.
The DMF is a database created and updated on a quarterly basis by the Social Security Administration. It contains upwards of 60 million death notices for individuals enrolled in the Social Security Program over the last 80 years, with information culled from government agencies as well as funeral directors and financial professionals.
Regulators from a number of states initiated an investigation into MetLife's practices based on allegations that MetLife was using the DMF to identify deceased annuitants so that MetLife could cease making annuity payments, but failed to similarly use the database to identify deceased life insurance policyholders. The National Association of Insurance Commissioners coordinated the investigation and created a multi-state task force in 2011 to oversee state efforts.
In addition to MetLife's agreement to provide $40 million to participating states to cover the costs of the investigation, MetLife agreed to make additional payments to unpaid beneficiaries in an amount which could exceed $400 million. MetLife is required by the terms of the settlement to use the DMF or a similar records database to identify deceased policyholders and to pay interest on unpaid claims dating back to 1995. The settlement also requires MetLife to attempt to locate beneficiaries of individuals identified in its review of the DMF and to report any unpaid funds as unclaimed property to state insurance agencies if no beneficiary is identified.
Additional states have until June 29 to participate in the settlement with MetLife, but a sufficient number of jurisdictions have already joined the agreement to trigger MetLife's payment obligations.
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