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It is the first settlement resulting from an audit of 21 insurance companies that Controller Chiang began nearly three years ago.
“Too many Californians have been victimized by a company they entrusted with their retirement security and the care of their families,” Chiang said. “While John Hancock is the first to be held accountable, it will not be the last. I am prepared to pursue all actions necessary – including litigation – to bring the rest of the industry into compliance.”
The controller initiated the audit investigation in July of 2008 to determine the insurance industry’s compliance with state unclaimed property laws.
Administered by the controller, the California unclaimed property program generally provides that businesses must send lost or abandoned financial accounts to the state after three years of inactivity in order to safeguard private property from being lost during mergers or bankruptcies, drawn down by service or storage fees, or simply used by private interests.
The audit revealed an industrywide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies.
Instead, companies would draw-down the policies’ cash reserves in order to continue collecting premium payments from the deceased. Once the cash reserves were depleted, the company would cancel the policy.
The audits also found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased. In other cases, the company had direct knowledge of the death of a policy owner, but still did not notify the beneficiaries.
For example, a policy was issued by John Hancock on Feb. 16, 1963, to an individual who subsequently died on April 20, 1999.
For the seven years following his death, the company continued to collect premium payments by depleting the policy’s cash reserves until it was finally canceled on Jan. 1, 2009. The policy’s file does not contain any indication of when the last contact with the insured occurred, or that any efforts were made to locate the insurance owner prior to the policy lapsing.
More than 11 years after the insured’s death, John Hancock still has not paid the beneficiaries or sent to the State Controller’s Office for safekeeping any benefits due under the policy. The company has written off all liability under the policy.
The controller’s investigation also exposed similar abuses with the administration of annuity contracts.
For example, John Hancock issued a contract on June 7, 1991, to an individual who subsequently died on May 1, 1995. The company’s own files contain notes revealing that the annuitant owner’s mother called the company in August 2002 reporting that her son had died. Additional notations in the file dated June 15, 2005, and Oct. 13, 2005, state that the annuitant had died.
Despite these acknowledgments, the file indicates the company continued to send mail to him in 2005, 2006 and 2007 – all of which was returned as undeliverable. Another notation was made to the file on July 14, 2009, acknowledging the owner was deceased, and that the company, for the first time, had attempted to contact a relative.
According to the file, on Oct. 26, 2009 – more than 14 years after the annuitant’s death – John Hancock paid the death benefit to the annuitant’s estate.
The groundbreaking settlement requires John Hancock, a subsidiary of Manulife Financial Corp., to do the following
• Restore the full value of more than 6,400 impacted accounts dating back to 1992;
• Create and adhere to methods for better identifying deceased policy holders and notifying their beneficiaries;
• Fully comply with California’s unclaimed property laws and cooperate with the controller’s efforts to reunite more than $20 million of death benefits and matured annuities with their owners or, in many cases, the owners’ heirs;
• Pay the state of California 3 percent compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later.
“These policies were purchased to give the owners and their families peace of mind,” said Chiang. “I will move to quickly return those benefits to their rightful owners.”
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Open to all who have an interest in the field of energy efficiency and renewable energy, this first in a series of classes is targeted toward energy professionals – and those who want to explore that opportunity – will be held April 28, 9 a.m. to 4:30 p.m. at the Calpine Geothermal Visitor Center, 15500 Central Park Road in Middletown.
Launched on Nov. 5, 2010, the “Lake County Energy Watch” program gives businesses, nonprofits, special districts, municipal facilities, and residents new opportunities to achieve significant energy savings while saving money.
The first class, “Energy Careers and Business Opportunities” will be held April 28, 9 a.m. to 4:30 p.m. at the Calpine Geothermal Visitor Center, 15500 Central Park Road in Middletown. This class is open to all who have an interest in the field of energy efficiency and renewable energy; a basic knowledge of energy concepts would be helpful.
This full-day seminar includes a continental breakfast and complimentary lunch catered by Chic Le Chef. Registration is required. There is no fee for the class. Visit the Lake County Watch Web page at www.energy.co.lake.ca.us, and select “Classes for Professionals” on the lefthand side of the page to the register.
Covering the California state policies and programs that are creating new and expanded business opportunities for energy professionals, this seminar also describes technology and economics about solar (electric and water heating), energy monitoring, and smart metering.
Participants will learn how energy efficiency programs are created and funded and will take part in a review of energy economics, using residential examples.
Various business models will be reviewed and the various certification and training options available to energy service professionals will be discussed.
For more information about the Lake County Energy Watch program, contact Michalyn DelValle at 707-263-2221 or visit www.energy.co.lake.ca.us .
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The 2010 franchise fee payments total more than $118 million and represent nearly $28 million for gas and more than $90 million for electric service.
A franchise fee is a percentage of gross receipts that PG&E pays cities and counties for the right to use public streets to run gas and electric service.
The property tax payments total more than $140 million, representing full and timely payment of property taxes due for the period from Jan. 1 to June 30, 2011.
The company’s tax payments to counties for tax year 2010/11 increased by almost $29 million over the previous property tax year’s payments as a result of an increase in assessments due to PG&E’s infrastructure investments and an overall increase in tax rates.
A full listing of county-by-county property tax payments is included below.
Pacific Gas and Electric Company Property Tax Payments, Tax Year 2010/11, 2nd Installment
ALAMEDA – $14,328,734
ALPINE – $52,389
AMADOR – $819,132
BUTTE – $2,617,655
CALAVERAS – $562,179
COLUSA – $1,620,928
CONTRA COSTA – $12,453,098
EL DORADO – $1,054,507
FRESNO – $10,547,337
GLENN – $517,785
HUMBOLDT – $1,491,984
KERN – $4,552,499
KINGS – $795,882
LAKE – $532,281
LASSEN – $41,317
MADERA – $1,220,470
MARIN – $1,937,436
MARIPOSA – $264,995
MENDOCINO – $926,923
MERCED – $1,831,959
MODOC – $214,011
MONTEREY – $2,244,902
NAPA – $1,372,106
NEVADA – $859,345
PLACER – $3,159,734
PLUMAS – $1,829,049
SACRAMENTO – $2,708,375
SAN BENITO – $449,703
SAN BERNARDINO – $620,343
SAN FRANCISCO – $8,593,583
SAN JOAQUIN – $6,192,097
SAN LUIS OBISPO – $13,112,814
SAN MATEO – $6,629,646
SANTA BARBARA – $684,621
SANTA CLARA – $15,278,718
SANTA CRUZ – $1,121,266
SHASTA – $3,744,287
SIERRA – $61,552
SISKIYOU – $110,040
SOLANO – $3,519,269
SONOMA – $3,952,088
STANISLAUS – $1,005,425
SUTTER – $761,117
TEHAMA – $880,740
TRINITY – $90,611
TULARE – $350,211
TUOLUMNE – $532,372
YOLO – $1,385,917
YUBA – $1,053,579
Total second installment tax payment: $140,687,013
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In the event of a delay, airlines would be required to provide passengers with adequate food and water, and working restrooms.
These same protections are included in the Air Passenger Bill of Rights Act (H.R. 729), a bill Rep. Thompson introduced in February.
“I am pleased that the Department of Transportation has recognized the need for stronger airline passenger protections,” said Thompson. “Many airlines have resisted offering passengers the option to deplane during excessive delays, or providing basic necessities like food, water, and access to working toilets. The DOT’s commonsense rules will help ensure the comfort and safety of the flying public.”
Specifically, the DOT’s new rule expands the existing ban on lengthy tarmac delays to cover foreign airlines’ operation at U.S. airports and establishes a four hour time limit on tarmac delays for international flights.
Carriers must also ensure that passengers stuck on the tarmac are provided adequate food and water after two hours, as well as working restrooms. Exceptions to the four hour rule will only be allowed for safety, security, or air traffic control reasons.
In addition to the four hour rule for international flights, the DOT will also require airlines to reimburse bag fees if luggage is lost and compensate individuals who are bumped off flights.
Air carriers will also be required to clearly disclose the fees charged for checked baggage, meals, canceling or changing reservations, and advanced or upgraded seating. The DOT’s new rules will take effect Aug. 23.
“The DOT has shown great initiative by taking action to stop the airline industry’s worst abuses, but there’s still more work to be done,” Thompson said. “Because these rules aren’t codified as law, they can be rescinded at any time. My bill, the Air Passenger Bill of Rights Act, would strengthen the protections announced by Secretary LaHood through an act of Congress. That’s why I will continue fighting to get this legislation signed into law.”