Nationwide Financial Services, Inc., Columbus, Ohio (Nationwide) has entered into a multi-milliondollar settlement with the insurance departments of California,Florida, Illinois, New Hampshire, North Dakota, Pennsylvania andOhio for its misuse of the Social Security Death Master Filedatabase (DMF).

The DMF is the primary tool by which the life insurance industrydetermines when annuitants and policyholders have died, serving tonotify insurers when lifetime payments can be halted and to notifybeneficiaries when death benefits can be paid out.

Nationwide agreed to business reforms that hope to ensure thatit expeditiously pays out life insurance, annuity and retainedasset account benefits. The company will also pay $7.2 millionwhich will be divided among the state insurance departments.

The settlement, announced by California Insurance CommissionerDave Jones this afternoon, pertains to both Nationwide LifeInsurance Company and Nationwide Life and Annuity InsuranceCompany.

The settlement was developed alongside an agreement withCalifornia State Controller John Chiang and stems from the somewhatprevalent practice across the industry of using the DMF only whenit suits the company. Legally, insurers should be checking the DMFevery three months.

“This settlement is another important step in our effort toreform industry practices regarding the use of the Social SecurityDeath Master File database,” said Commissioner Jones. “As otherinsurers have done, Nationwide selectively used the Death MasterFile database to cut off payments to annuity holders but did notuse that database to identify deceased life insurance policyholdersand pay their beneficiaries. This settlement ends that practice. Istrongly encourage other insurers to come forward and enter similaragreements. Beneficiaries of deceased policyholders should receivetheir payments immediately.”

Commissioner Jones' imploration may be effective; prior toNationwide reaching a settlement, California and other states wereable to reach settlements with Prudential for $17 million and MetLife for $40 million.

In a statement Thursday afternoon, Mike Switzer, a NationwideFinancial spokesman said, “Nationwide Financial is pleased to havereached an agreement with the Florida Office of InsuranceRegulation and the other states involved in this exam regarding ourcontinued use of the Social Security Death Master File in order toindentify potentially deceased policy holders and initiate theclaims process. Nationwide agreed to a $7.2 million settlement forthe Market Conduct Exam. As part of this process, Nationwide hasidentified and paid approximately $144 million in benefits to lifeand annuity beneficiaries who had not previously filed claims.After fully cooperating in this process, we look forward tofulfilling the terms of this agreement and moving forward with thismatter resolved.”

Thursday's settlement becomes effective when 14 additional stateinsurance departments sign on.

This article was originally posted at LifeHealthPro.com, a sister site of CreditUnion Times.