Settling an investigation that began four years ago, AIG Insurance Co. has agreed to pay an estimated $25 million to $30 million to California beneficiaries of life insurance policies, state officials said Monday.
Officials said AIG became the sixth insurance company to settle with the state for failing to pay death benefits to beneficiaries after the policyholders died. With AIG's payments, a total of $138 million will have been paid to California beneficiaries.
An audit begun in 2008 by state Controller John Chiang showed companies were failing to pay death benefits "despite having access to federal records indicating that policyholders had died, or direct confirmation from relatives of the deceased," according to a statement from his office.
The settlement was announced by Chiang and Insurance Commissioner Dave Jones. The settlement requires AIG to regularly check the Social Security Administration's death files to see if any of its policyholders have died.
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