(Adds Lincoln Financial comment and details from order.)
By Suzanne Barlyn and Sweta Singh
March 7 Insurer Lincoln Financial Group has paid
$50.7 million to policyholders for lost insurance claims as part
of a settlement, New York State's financial regulator said on
The settlement between Lincoln and the New York State
Department of Financial Services (NYDFS) also includes a fine of
$1.5 million for unfair claims settlement practices, the
regulator said in its consent order.
The problems began after Lincoln's 2006 merger with
Jefferson-Pilot Corp and continued for at least eight years,
according to the order. Numerous "technical issues" caused
Lincoln to lose track of a large number of life insurance
policies nationwide, the regulator said.
"Lincoln self-reported the issues to the New York Department
of Financial Services, and all claims related to this matter
have since been resolved," a Lincoln spokesman said in a
"We have taken additional steps to ensure that similar
issues will not arise in the future," the spokesman said.
Lincoln reported the "extensive claims backlog" to New York
and other states in April 2015, according to the order.
Thousands of beneficiaries of New York policy holders
"received interrupted or no communication from Lincoln or
received payments that were weeks, months or even years late,"
the regulator said.
Lincoln failed to follow up in timely fashion with claimants
and also failed to locate beneficiaries or attempt to contact
them when the insurer had reason to believe that an insured
person had died, the regulator said.
Lincoln told the New York regulator that it has since
introduced measures to prevent a recurrence of the problem,
including hiring additional staff and updating computer
policies, according to the order.
(Reporting by Sweta Singh in Bengaluru; Editing by Anil D'Silva
and Frances Kerry)