Department of Insurance announces multistate settlement with AIG

Illinois will share part of an $11 million penalty related to payment of life insurance benefits

[October 23, 2012]  CHICAGO -- Illinois Department of Insurance Director Andrew Boron announced Monday that an agreement has been reached with American International Group as part of a multimillion-dollar settlement with several states. Under the settlement, AIG agreed to change the way it handles claims business practices related to the payment of life insurance benefits and also agreed to pay $11 million to states that are party to the settlement.

The settlement agreement is the result of a multistate examination to investigate AIG's practices and procedures for identifying and paying proceeds to beneficiaries of life insurance policies and annuities. Illinois was among the seven lead states that initiated discussions with the company regarding compliance and the need for reform. AIG will pay a total of $11 million to be shared among states that sign on to participate in the settlement agreement.

"We appreciate AIG's cooperation and the company's efforts to proactively adopt business practices that protect policyholders and ensure that death benefits are paid in a timely manner," Boron said. "This agreement with AIG is the fourth national settlement agreement reached as part of a joint effort of state regulators to protect consumers and change the way life insurance companies handle claims by proactively searching for beneficiaries."

The other settlement agreements to change the way companies handle claims have been made with Nationwide, announced earlier this month, MetLife and Prudential. These companies will implement business reforms to promote a timely and efficient search for beneficiaries of their in-force life insurance policies and annuities through regular matches of its insureds and annuitants against the Social Security Administration's Death Master File. The companies will also make regular reports to regulators to demonstrate their compliance under the agreements.

The AIG agreement becomes effective after 20 states sign on. The states that led the examination and have signed the agreement are Illinois, California, New Hampshire, North Dakota, Texas, Pennsylvania and Florida.

A copy of the settlement agreement is available at http://insurance.illinois.gov/Home/ImpLinks.asp. Consumers who have any questions regarding this settlement, or who have any questions or concerns about their insurance, should contact the Consumer Division of the Illinois Department of Insurance at http://insurance.illinois.gov/ or call 866-445-5364.

The mission of the Illinois Department of Insurance is to protect consumers by providing assistance and information, by efficiently regulating the insurance industry's market behavior and financial solvency, and by fostering a competitive insurance marketplace. The department assists consumers with all insurance complaints, including health, auto, life and homeowner.

[Text from Illinois Department of Insurance file received from the Illinois Office of Communication and Information]