MetLife fined $19.7M and to pay $189M in restitution for failure to locate and pay benefits to thousands of New Yorkers by the DFS

On Jan. 28, 2019, the Department of Financial Services (DFS) announced a consent order with MetLife Insurance Company, under which the insurer will pay a penalty of $19.7M for violations of New York Insurance Law stemming from a DFS examination which found the insurer failed to properly locate and pay benefits to thousands of NY insureds and beneficiaries. MetLife was cited for violations from 1992-2017.

As part of the consent order, MetLife will also pay retroactive benefits to policyholders in NY State and elsewhere totaling more than $189M. MetLife has already paid $123M of the approximately $189M to consumers whose group annuity benefits had been lost or delayed, and will pay the remainder going forward.

The DFS examination found MetLife violated legal requirements governing Its administration of group annuity contracts, procedures for searches against the Social Security Death Master File, and Variable Annuity Replacement Processes. MetLife also unlawfully released reserves on in-force annuity contracts for its pension transfer business and failed to promptly settle group annuity pension claims.

The consent order requires MetLife to retain a third-party servicer that specializes in locating beneficiaries who are due pension benefits and have not been paid. The insurer will be responsible for paying all expenses incurred by the third-party servicer.

The order also mandates that MetLife provide DFS with four detailed remediation plans providing for remediation or restitution to policyholders or their beneficiaries.