MetLife will pay a $19.75 million settlement following an investigation by the New York State Department of Financial Services connected to the insurer's revelation that it had not paid about 13,500 participants in its group annuity population over the past 25 years due to insufficient administrative practices.
As part of a consent order, MetLife will pay retroactive benefits to New York state policyholders, as well as those elsewhere, totaling more than $189 million. MetLife has already paid $123 million to consumers whose annuity benefits had been delayed or not given, according to a news release Monday from the New York State Department of Financial Services.
In January 2018, MetLife said it had uncovered a "material weakness" in financial reporting and reached out to regulators about its lapses after determining that it didn't have enough money set aside to pay some annuity and pension customers. The insurer followed up in a February 8-K filing with the Securities and Exchange Commission, saying that about 25 years ago, "companies that are or have been MetLife Inc. subsidiaries established a practice of releasing the full insurance liability after two attempts at contacting these annuitants, based on the presumption that these annuitants would never respond and had not become entitled to benefits based on certain contractual provisions." MetLife also said in the February filing it has added $510 million back to the annuity reserves set aside for the 13,500 participants that had been affected and those participants, once located, would receive payments with interest.
"Today's action is a victory for policyholders, whose benefits were not paid due to MetLife's failures, with the department taking the necessary action to protect consumers," said Maria T. Vullo, financial services superintendent, in the news release. "The restitution and other corrective actions mandated under this consent order will ensure that consumers are paid the benefits to which they are entitled and that an appropriate fine is paid and procedures put in place to prevent this from happening again. The department appreciates MetLife's cooperation in self-reporting its claims issues, resolving these matters and committing to full restitution to all eligible beneficiaries."
MetLife spokeswoman Kim Friedman provided an emailed statement from the insurer that said: "As part of MetLife's commitment to its customers, the company continuously improves its systems and processes to take advantage of best practices and technology innovations. Following a market conduct exam by the New York State Department of Financial Services of Metropolitan Life Insurance Co., MetLife has agreed to take actions, many of which are already in progress, to improve our procedures to better serve our customers."