In the continuing battle against insurance companies, California announced that it, along with six other states, have settled with Nationwide Financial Services, Inc. The settlement includes a $7.2 million penalty to the seven state insurance departments. This settlement applies to both Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company.
The settlement terms include business practice reforms that Nationwide must implement. These practices include checking the Social Security Death Master File every three months, to determine whether any insured individuals have died, initiating the insurance company's liability to pay out the proceeds of a life insurance policy. Previously, most insurance companies only used the DMF when it best suited them - to stop payment on annuities - not when it suited the customers.
According to Nationwide, they have already paid out $144 million in previously uncollected proceeds from life insurance policies due to this Market Conduct Exam.
The settlement will become effective when a total of 21 states sign on to the agreement. John Hancock, Prudential, and MetLife are among the insurance companies that have previously settled with the insurance departments on the use of the DMF and unpaid life insurance policies. West Virginia recently sued MetLife for not complying with state laws on turning over proceeds when beneficiaries cannot be found.