The recent settlement between Prudential and 19 states resolved auditors’ inquiries into use of the Death Master File (DMF) and guidelines on beneficiary location for deceased policy owners. While Prudential is the second life insurance company to agree to such a settlement, they will not pay a fine and have denied any wrongdoing.
In the official agreement release, Prudential notes that “in view of the complex issues raised,” there is “the probability that long-term litigation and/or administrative proceedings would be required to resolve the disputes.” As a result of the settlement, Prudential has agreed to enhance its unclaimed property policies to include incomplete or missing social security numbers, transposed letters in first and last names, or transposed digits in birth dates and social security numbers. Prudential’s Chief Communications Officer, Robert DeFillippo, noted that these improvements “will supplement Prudential’s extensive prior efforts” to identify decedents and locate beneficiaries of life insurance policies.
In addition to the modifications of their beneficiary location policies, Prudential has also agreed to restore the value of any affected accounts as well as pay the beneficiaries 3% compounded interest on the value of the held amounts. With California taking the lead on the audit and settlement, Prudential also pledged to comply with California laws and report unclaimed property on an accelerated basis when heirs or beneficiaries cannot be located.
As acknowledged in Prudential’s official agreement release, there are a variety of complex issues at hand. These issues will continue to be discussed and debated by both the states and the insurers. As additional states propose more stringent beneficiary location policies, life insurance companies will be pressed to verify decedents through the use of the Death Master File or comparable sources. Check back often, as this is likely only the latest highlight in this ongoing debate.