Lincoln National Corp.'s Lincoln Financial Group, the Radnor insurance and annuity company best known as sponsor of the NFL Eagles stadium, "lost track of thousands of claims" for Americans who had bought life insurance policies with the former Jefferson Pilot Corp., its regulators in New York State said today.
The customer and claims data vanished after Lincoln bought Jefferson Pilot in 2006. Senior officers at Lincoln, which is based in Radnor, knew about the problem soon after they merged the companies' computer systems — but it took Lincoln until 2015 to "self-report" what went wrong, Maria T. Vullo, New York State's Financial Services Superintendent, said in her statement.
The company agreed to pay its customers $50.7 million "in restitution," plus $1.5 million in fines "for lost insurance claims and for unfair claims settlement practices" under this consent order approved by New York officials.
The order followed "the untimely payment of certain death claims," Lincoln spokesman Michael Arcaro told me. All affected policies have "been resolved," he added, without commenting on whether other states have taken action. In its statement New York said Lincoln's problems were "nationwide."
Lincoln and its New York Lincoln Life & Annuity subsidiary eventually "self-reported" to regulators "that the company had lost track of thousands of policies after merging claims-processing systems with Jefferson-Pilot," according to the state.
New York's ensuing investigation then "found that the company failed to adequately address early red flags related to the issue."
Life insurers "have a duty to keep track" of claims and pay beneficiaries when their customers die, Vullo said in her statement. While Lincoln took "steps" toward keeping in touch with clients, "we stress the importance of keeping consumers from falling through the cracks during mergers and other types of business interruptions."
In the Jefferson-Pilot case, "thousands of beneficiaries of New York policyholders experienced delays in receiving communications from Lincoln about their claims, with some waiting weeks, months, or even years before receiving compensation."
The state also says it "is requiring" Lincoln to improve its procedures so it doesn't leave customers hanging again in its next merger. Arcaro told me Lincoln has fixed the problems.