Met Life and the Death Master Data File

Met Life and the Death Master Data File: Snoopy Made a $500 Million Oopsie

Recent news came out this week that Met Life (Metropolitan Life, for those not into the whole brevity thing) will pay about $500 million in a settlement over the whole Death Master File incident.  What does this mean?  Why are they being fined/sued?  Should you stay away from Met Life as a result?  We're going to tackle all of this today. 

What Did Met Life Do Wrong?

According to reports filed, Met Life accessed information concerning policy holders in the Social Security Death Master File (also known as the Social Security Death Index), which is a database of all claims filed with the Social Security Office concerning deaths of individuals with a U.S. Social Security Number.  One typically reports a death to the Social Security office in order to obtain the Social Security Lump Sum Death Benefit (currently $255).  Typically this report is filed by a funeral home.  The database contains the following attributes for each record:

  1. First Name
  2. Middle Initial (on all records generated since the 90's)
  3. Last Name (Surname)
  4. Date of Birth
  5. Date of Death
  6. Social Security Number
  7. Sate and year in which the Social Security Number was issued
  8. Last zip code of the deceased
  9.  Zip code where Lump Sum Benefit was sent

The database is a public document and is accessed by payment to the National Technical Information Service.

There are a lot of different uses for the database, and generally it is used as an anti identity theft measure.  The claim against Met Life is that they queried the database for information on policy holders and, despite knowing they had died,  never paid the appropriate proceeds to the their intended beneficiaries.  In addition, Met Life is also in violation of Unclaimed Property laws in certain states who are now claiming Met Life knew the policy holders had passed away and failed to forward the funds to the proper authorities.

So Did Met Life Actually do anything Wrong?

The answer to that questions is more matter of opinion.  Currently it would seem to be the case enough people to think they did indeed do something wrong, and this is why they will be dolling out about a half billion dollars to settle claims filed against them.  The exact reason they accessed the database could be explained away with countless purposes  and I'm sure Met Life would tell us it had nothing to do with checking on the living status of their policy holders (to do otherwise would likely mean admitting fault).

Still this sets a tricky precedent for other companies in the future.  Prudential Financial has also been caught up in this issue, and these companies do use this database to check identities to ensure someone isn't trying to use someone's ID for illegal insurance purchase purposes.

Is this a Sign that I should Stay Away

No probably not, and if you are talking with an agent who is making that suggestion based solely on this fact, he or she might be violating certain laws or contractual obligations with other insurance carriers.  $500 million, while a lot of money, is nothing compared to the problem Prudential Financial found itself in during the mid 90's.  Met is still the largest life insurer in the United States and has superlative financial ratings.  On top of that the $500 million is eclipsed by the $6.7 billion in net income they earned last year.  They announce earning for Q1 this Friday and I'd predict they've already cleared well over $500 million in net income for the year.

However for those who look at this and coil ready to flame the life insurance industry, let's take a moment to highlight the importance of forging a good relationship with an agent.  A lot of unclaimed death benefits could be avoided if people worked with agents who kept tabs on thing (you could remove those last 5 words and still have a powerful sentence that would improve most people's financial lives incredibly).  Owning a policy no one else knows about, or not taking the time to understand what kind of benefits you have through an employer plan is a move that you make at your own (or your family's) peril.

It's a black eye, and an embarrassing one at that.  But far worse offenses have been committed resulting in much larger sums of restitution.  According to their own account they paid out almost $35.5 billion in policy holder benefits and claims in 2011.  Big names like Met Life will always attract this sort of attention.  There are other offenders, and some will probably slide under the radar because they don't have the potential in terms of pay day from a law suit.

So, still a quality company that we can reasonably expect to do the right thing.  Met Life just needs to deal with some bad press and correct their error, shouldn't be a problem for a company in the business of indemnifying losses.

About the Author Brandon Roberts

Brandon launched the Insurance Pro Blog in July of 2011 as a project to de-mystify the life insurance industry. Brandon was born in Northern New England, and he currently calls VT home. He attended Syracuse University and graduated with a triple major in Economics, Public Administration, and Political Science.

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