Banner
Thursday, April 17, 2014

California State Controller John Chiang Sues Life Insurance Company For Violating Unclaimed Property Law

Insurer ANICO Refuses to Provide Records Required by California Law

May 7, 2013 - SACRAMENTO - State Controller John Chiang today filed a lawsuit against a Texas-based life insurance company for refusing to turn over records needed to audit the company, which is suspected of failing to pay life insurance benefits to the heirs of deceased policy holders.

"In what appears to be a pervasive industry practice, many insurers are fleecing policyholders by warmly welcoming premiums, while turning a cold shoulder when the time comes to pay," Chiang said. "While seven insurers, to date, have responsibly come forward to work out settlements with my office ensuring that families are made whole, ANICO continues to stonewall the basic legal requirement to open up their books."

The complaint alleges that American National Insurance Company (ANICO) failed to turn over data needed for the Controller to conduct audits, which will determine whether the company failed to pay deceased policyholders’ beneficiaries or turn the proceeds over to be safeguarded in perpetuity by the State Controller's Unclaimed Property program.

Controller Chiang began auditing insurance company practices in 2008, revealing an industry-wide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies, despite having access to federal records indicating that policyholders had died. This information is contained in the "Death Master File" – a database maintained by the Social Security Administration and regularly scanned by companies that sell and administer life insurance policies.

Despite having access to these records – and in many cases, having direct confirmation from family members that the policyholder had passed away – some companies would instead use the policies' cash reserves to continue paying premiums to the company. Once the cash reserves were depleted, the company would cancel the policy, leaving the beneficiaries empty-handed.

Unclaimed property laws have been in place in every state since 1959 to protect private property from being lost during mergers or bankruptcies, drawn down by service or storage fees, or simply used by private businesses. Administered by the Controller, the California Unclaimed Property program generally provides that businesses must send lost or abandoned financial accounts to the State after three years of inactivity. The Controller maintains an unclaimed property database accessible by any California resident to identify all unclaimed property the State has collected on their behalf. The database is available at www.claimit.ca.gov.

Since 2008, the Controller has conducted audits of more than 40 companies that sold life insurance and annuity products in the United States. However, since the Controller launched his audit of ANICO , the company has steadfastly refused to turn over the information as required by California Code of Civil Procedure, claiming its policies are not subject to the Controller's audits.

"ANICO's obstructive tactics significantly impede my office's ability to identify amounts that are required to be turned over to California for distribution to the rightful owners," said Chiang. "If insurers are unwilling to fulfill their duty to clients and comply with the rule of law, I have no reservation in pursuing every legal option to compel them."

The lawsuit, filed in Superior Court in Sacramento, seeks to prohibit ANICO from continuing to violate the Unclaimed Property Law by refusing to turn over the requested data, and permit a full, complete and timely examination of all of ANICO’s books and records. The Controller also asks the court for damages and penalties due to the State, as well as reasonable attorney fees.

To date, Controller Chiang has reached global settlements with seven life insurance companies, returning more than $143 million belonging to California beneficiaries alone. Under the settlements, the companies have agreed to improve their policies to ensure deceased policy holders are more quickly identified and beneficiaries receive their benefits in a timely manner.

To read more about the Controller's efforts, click here.
Share/Save/Bookmark
Please wait while JT SlideShow is loading images...
'Click' For More Info: Visit the 'Cafe at the Bug' for Breakfast, Lunch & Dinner. They offer Fresh, Local, & Organic options....worth making a trip for!‘Click’ Here to Visit ‘The Mattress Store’ Sales Page for More Information'Click' For More Info: Visit Happy Burger Diner..."We have the LARGEST Menu in the Sierra" in Mariposa, California
  • 'Click here to visit: 'Gold Country Brew Supply'... "This way to homebrew heaven!"
  • 'Click' for more info! Host a party to earn FREE Scentsy or place an order through the site to support a local businesswoman. Thank you!
  • 'Click' For More Info: Visit the Yosemite Bug Rustic Mountain Resort's Health Spa! Offering Massage, Therapeutic Bath, Cedar 'Hot-Rock' Sauna, with Deluxe Changing Rooms and so much more. Call to reserve Your appointment Today!
  • 'Click' For More Info: 'Perfect Skin'...See Us For ALL Your Skin Care Needs, Located In Mariposa, Ca.
  • 'Click' For More Info: 'Gold Rush Trading Post' Located In Mariposa, California "For ALL Your Prospecting Supplies & Metal Detector Needs".
  • 'Click' For More Info: 'Gold Rush Trading Post' Located In Mariposa, California "We Buy Scrap Gold and Pay Top $$$ Between Sonora & Fresno".
  • 'Click' For More Info: 'Chocolate Soup', Fine Home Accessories and Gifts Located In Mariposa, Ca.
  • Click Here For All Creatures Veterinary Hospital in Mariposa, Ca.
  • 'Click' To Visit Our Facebook Page: Get Your Glass Repaired or Replaced at 'Mariposa Auto Trim', in Mariposa, California
  • 'Click' For More Info: California State Mining and Mineral Museum, in Mariposa, California
  • 'Click' For More Info: Mariposa Museum and History Center in Mariposa, California
  • 'Click' For More Info: Foster True Value...For All your Home and Hardware Needs In Mariposa, California
  • 'Click' For More Info: Sugar Pine Cafe in Mariposa, California
  • 'Click' For More Info: Inter-County Title Company In Mariposa, California
  • 'Click' For More Info: Butterfly Creek Winery In Mariposa, California
  • 'Click' For More Info: Happy Burger Diner..."We have Wi-Fi & the Largest Menu in the Sierra" in Mariposa, California
English Chinese (Simplified) Chinese (Traditional) French German Italian Portuguese Russian Spanish