Nationwide Financial Services Inc. has entered into a multimillion-dollar settlement with the insurance departments of California, Florida, Illinois, New Hampshire, North Dakota, Pennsylvania and Ohio for its misuse of the Social Security Death Master File (DMF) database, LifeHealthPro reported.
The DMF is the primary tool by which the life insurance industry determines when annuitants and policyholders have died, serving to notify insurers when lifetime payments can be halted and to notify beneficiaries when death benefits can be paid out. According to the settlement, the Columbus, Ohio-based insurer had used the database to cut off payments to annuity holders who had died, but then did not use that database to identify beneficiaries who were owed death benefits.
Nationwide agreed to business reforms aimed at ensuring that it expeditiously pays out life insurance, annuity and retained asset account benefits. The company also will pay $7.2 million, which will be divided among the state insurance departments.
Nationwide, whose Allied Insurance subsidiary is based in Des Moines, employs approximately 4,000 people in Greater Des Moines,
The settlement, announced by California Insurance Commissioner Dave Jones on Thursday, pertains to both Nationwide Life Insurance Co. and Nationwide Life and Annuity Insurance Co.
Two other major insurers reached similar settlements with states earlier this year. In February, Prudential Financial Inc. reached a $17 million settlement with 20 states, and in May Metropolitan Life Insurance Co. entered into a $40 million settlement with 22 states.