Death Master Report

3 California InsuranceCommissioner Dave Jones is one of the leaders of a national insurance commissioners’ investigation into life insurers’ use of the Social Security Administration’s Death Master File for their business benefit while ignoring information the database contained that would allow life insurers to identify deceased life insurance policyholders whose beneficiaries were owed benefits. The investigation led by Commissioner Jones and several other state insurance commissioners has resulted in multistate regulatory settlements with 27 life insurers, representing over 80 percent of the market (by premium volume based on 2010 annual reporting). In the settlements, the insurers agreed to use the Death Master File and match it against their lists of past and current policyholders to determine if a policyholder has died and then to search for the beneficiaries of the policyholder to pay benefits. The nationwide Death Master File investigation is one of the most important investigative and enforcement efforts ever undertaken by insurance regulators. The investigation of insurers’ failure to use the Social Security Administration’s Death Master File to identify deceased life insurance policyholders and pay beneficiraries and the settlement agreements obtained by Commissioner Jones and the other lead state commissioners have resulted in nearly $10 billion in life insurance benefits being paid to hundreds of thousands of beneficiaries nationwide. Insurers paid more than $1 billion to California beneficiaries alone. Created by the Social Security Administration, the Death Master File contains the names and identity of almost everyone for whom a death certificate is filed in the United States. The Social Security Administration (“SSA”) uses the Death Master File to determine when to stop paying social security benefits because someone has died. Years ago, the SSA licensed the Death Master File to life insurance companies. Until recently, many life insurers only used the Death Master File for their economic benefit to identify deceased annuity holders to stop making annuity payments, but the life insurers failed to use the Death Master File to identify deceased policyholders to pay life insurance benefits. I. Executive Summary