The New York State Department of Financial Services has fined Globe Life Insurance Co. of New York $439,000 and ordered the company to pay $7.3 million in restitution to beneficiaries of the holders of certain life insurance policies.
The penalties were imposed after the regulator found that Globe Life improperly denied claims and rescinded life insurance policies for 439 deceased policyholders and engaged in unfair claims settlement practices in violation of state law. An independent third-party administrator will be named to oversee the restitution process to ensure that all eligible beneficiaries receive the payments to which they are entitled.
The regulator's investigation found that Globe Life, among other things, improperly closed claims when policyholders died within the two-year contestable periods without proving in court actions that there were misrepresentations by the policyholders on the applications for insurance.
Globe Life also routinely requested medical records from a deceased policyholders' beneficiaries if the deaths occurred within the two-year contestable periods, even where it had no basis to suspect material misrepresentations. If medical records were not produced, the company unilaterally closed the claims and notified the beneficiaries that the policies would not be paid because of the failures to provide medical records as requested.