DFR Orders Insurance Company to Pay $800,000 Penalty for Improper Life Insurance Interest Payments
Contact: Stephanie Brackin, Information Management Officer, 802-828-4872, email@example.com
Montpelier, VT – The Vermont Department of Financial Regulation has entered into a settlement agreement with John Hancock Life Insurance Company, of Massachusetts, for improperly calculating interest amounts resulting in underpayments to approximately 962 life insurance policy beneficiaries. Under the terms of the settlement, John Hancock will pay an $800,000 administrative penalty and implement a corrective action plan. The company has also paid $154,499.57 in restitution to the affected beneficiaries.
“Vermonters are entitled to the full benefit of their life-insurance policies. I am pleased John Hancock worked cooperatively with our department, provided full restitution and implemented a corrective action plan to prevent this from happening again,” said DFR Commissioner Michael S. Pieciak. “Further, the significant penalty sends a strong message to insurance companies that claims must be paid promptly and fully.”
DFR had previously entered into a 2004 settlement with John Hancock for failing to pay proper interest on six life insurance claims. The company remained in compliance with Vermont law through 2012, however, a system replacement resulted in hundreds of miscalculated payments between January 1, 2013 and July 31, 2018. A follow-up audit by the department in 2017 identified the violations.
Earlier this year, DFR settled similar allegations against CMFG Life Insurance Company; CMFG paid a $231,000 penalty for underpaying interest on 154 claims.
Commissioner Pieciak and Deputy Commissioner of Insurance Kevin Gaffney commend the DFR team that worked on this matter for their excellent work. The team included Jennifer Rood, Chris Rouleau, Phil Keller, Marcia Violette, and Izzi Keiser.
If you have questions regarding a specific life insurance matter please contact DFR Consumer Services by email at firstname.lastname@example.org or by phone at either 802-828-3302 or 800-964-1784. If you need assistance locating a lost or misplaced or life insurance policy please utilize our free Life Insurance Policy Locator found at our website: dfr.vermont.gov.