New York Life Insurance Co. (NY Life) has agreed to pay $15 million to state insurance regulators in a deal that resolves all state regulatory and comptroller/unclaimed property agency enforcement actions dealing with the company's unclaimed property practices.
The action, coming on the heels of a June 2013 settlement that NY Life and 10 other insurers reached with a group led by California Controller John Chiang of California and his colleagues, means that the likely next step in the ongoing saga of the unclaimed property probes is a model law drafted by the National Association of Insurance Commissioners (NAIC) that will provide guidance to all insurers going forward.
“We believe that uniform rules and regulations are the best way to enact industry reform for DMF use, and for future, similar market conduct issues,” Werfelman said
He said the lead state insurance regulators involved in the NY Life case had made clear that the lack of a settlement involving a payment from New York Life was an obstacle to moving forward on national standards for unclaimed property searches.
“Therefore, in order to put the matter behind us and clear the way for the development of uniform national standards on unclaimed property, NY Life has agreed to make a voluntary payment of $15 million to resolve the matter with the six lead states handling our review,” Werfelman said.
He also said that the “fundamental issue” in all the investigations is that “technology had advanced beyond the laws on the books – and still we have no national standard to guide the industry.”
He said that only a few states – like New York – have promulgated new laws or regulations to address the matter.
The agreement signed with the six lead states is expected to have as many as 40 or more participating states once all sign on, officials said.
The lead regulators on the agreement are the insurance regulatory agencies in California, Florida, North Dakota, Illinois, Pennsylvania and New Hampshire.
NYLife “has been vocal” about the need for uniform standards for unclaimed property searches and our position that enforcement action on unclaimed property is not a substitute for the tried and true process for developing new law.
“We also made it clear that since this issue was raised publicly in early 2011, our company has been performing the searches of the Social Security DMF that the regulators have been seeking from us,” Werfelman said.
He also noted that NY Life’s principal regulator, the New York Department of Financial Services, has said publicly that the company was in full compliance with its DMF regulations and was following them nationally.