January 11, 2022
ACTING DFS SUPERINTENDENT ADRIENNE A. HARRIS ANNOUNCES COLUMBIAN MUTUAL LIFE INSURANCE COMPANY TO SETTLE FOR MORE THAN $10 MILLION FOR FAILING TO PAY UNCLAIMED LIFE INSURANCE PROCEEDS TO THOUSANDS OF BENEFICIARIES
Columbian Mutual Failed to Comply with Death Benefits Law
Settlement Requires More than $7 Million in Restitution to New York State Consumers, in addition to $3 Million in Penalties
Acting Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services (DFS) has entered into a consent order with Columbian Mutual Life Insurance Company (“Columbian Mutual” or the “Company”) for failing to comply with New York law governing unclaimed life insurance proceeds. Columbian Mutual will pay approximately $7.83 million in restitution to New York consumers, plus $3 million in penalties to New York State.
“Columbian Mutual failed to identify unclaimed death benefits on thousands of life insurance policies, many of which were purchased by low-income families,” said Acting Superintendent Harris. “In failing to properly conduct required cross-checks with Social Security records and promptly paying beneficiaries, Columbian Mutual did not honor its payment obligations to numerous beneficiaries of deceased policyholders, depriving New York families of much-needed funds they were owed.”
DFS's investigation found that, in violation of New York law, Columbian Mutual failed to make efforts to identify beneficiaries for thousands of policies. In violation of the law, Columbian Mutual failed to cross-check all policies against Social Security Administration Death Master File (DMF) records, and delayed outreach or outright failed to contact beneficiaries for thousands of policies. In addition, Columbian Mutual failed to transfer death benefits to New York State as abandoned property, as required by the law, when unable to locate beneficiaries.
As a result of the settlement, New York beneficiaries will receive more than $7.8 million in restitution and Columbian Mutual will pay penalties of $3 million. Columbian Mutual will take corrective actions, including performing a new DMF cross-check of all policies in-force since 2011 and conducting research on DMF Matches identified since 2011, which will result in additional restitution to New York beneficiaries. The Company has also agreed to revise its unclaimed property policies to ensure compliance with New York law.
New York Regulation 200 became effective in 2012 and required life insurance companies to regularly seek out beneficiaries to pay death benefits, rather than waiting for claims to be filed. But for the promulgated regulation, a significant number of New York residents would not have been aware that they were named as beneficiaries on life insurance policies and would not have filed claims.
Read a copy of the Columbian Mutual Life Insurance Company consent order on the DFS website.