Georgia is investigating the two largest companies in the U.S. selling life insurance. The probe comes after a national business magazine reported the companies were holding onto $28 billion owed to beneficiaries and making a profit from it.
Bloomberg Markets Magazine reported last month MetLife and Prudential had a practice of keeping money traditionally disbursed all at once to beneficiaries and investing it.
Georgia Insurance Commissioner John Oxendine says the state has launched an investigation into the decades-old practice that tens of thousands of Georgians have signed on to.
"It appears the representation may have been this money was sitting in a checking account. That was not really the case," says Oxendine. "You could write checks and the insurance company was moving money to cover those checks as you wrote them, but they were investing it themselves and really trying to make money on the float."
Oxendine says his agency is trying to figure out exactly what the insurance companies were doing and if they properly disclosed that to customers.
"If the consumer understood what was happening and the consumer agreed to it, then that’s probably okay," says Oxendine, "but consumer didn’t understand and they didn’t properly explain and have a proper agreement from the consumer, than that’s a completely different situation."
He says the issue never came to light before the national report because no one complained and it’s not a practice that would require pre-approval from his agency.