60 Minutes, the CBS news magazine, looked at the problem of unclaimed life insurance benefits in 2016. Lesley Stahl interviewed Jeff Atwater, Chief Financial Officer of Florida who had worked with many of the top companies to get benefits paid to policyholders that had died as far back as the 1960s. Who were the carriers? According to Mr. Atwater, “all the large brand names that you are familiar with.” The carriers, to their credit, “sat down with us and made right,” according to Mr. Atwater. But, 60 Minutes pointed out instances where it was clear the carriers were at fault. After all, this is 60 Minutes. It has been said that if you are a company or an industry, you do not want to be mentioned on 60 Minutes, and this mention gave the industry a black eye. After the show aired, states began to ramp up regulatory activity.
This is not a new issue. Carriers lose touch with their policyholders. In 2000, John Hancock demutualized, sending information packages to millions of policyholders. Four hundred thousand were sent back undeliverable. It has been reported that Prudential lost contact with 2.7 million policyholders at one point (1).
Currently, the problem is also creating negative financial consequences for institutions who deal with pension benefits. In December, the Wall Street Journal reported one company had “failed to pay monthly pension benefits to possibly tens of thousands of workers in accounts that it has on its books,” requiring them to strengthen reserves, which may negatively affect their “results of operations.” A company executive said that the people owed the money were beneficiaries that the company “sought to locate over time unsuccessfully” (2). The company, MetLife, Inc. saw its stock drop nearly 9% and has lost approximately $8.5 billion in market cap (3).
The good news is there is an economical answer for companies like MetLife. In July of 2017, ITM TwentyFirst merged with Pension Benefit Information (PBI), bringing the pre-eminent location and death audit firm in the country under the ITM TwentyFirst umbrella and widening the increasing services we offer to clients and prospects alike. PBI provides proactive solutions for those financial institutions struggling with these issues.
It does not look like this problem will disappear. According to an article published just this week, MetLife’s CEO, when discussing the missing pensioner issue, said, “It’s hard for me to know, really, what happens in the other companies in our industry, but I can’t believe we’re the only one.” He went on to say, “It is an area where I think the entire industry has to find ways to do a better job and find these people and pay benefits to these people that they are owed” (5).
For those companies looking for a solution to this problem, PBI is there to help. For more information on Pension Benefit Information (PBI) you can visit their website at http://www.pbinfo.com/.
1. The Insurance Forum, Joseph Belth, November 2010
2. MetLife Discloses Failure to Pay Thousands of Workers’ Pensions, Leslie Scism, The Wall Street Journal, 12/15/2017
3. MetLife Shares Tumble on Pension Shortfall News, Joann S. Lubin and Leslie Scism, The Wall Street Journal, 1/30/2018
4. MetLife Hires Investigators in Search for Missing Pensioners, Alistair Gray, Financial Times, 2/13/2018
5. MetLife CEO on Missing Annuitants: “I Can’t Believe We’re the Only One”, Marie Suszynski, AM Best, 2/16/2018