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Prudential settles with 19 states; life insurers use social media

By Maryalene LaPonsie on February 9th, 2012

The Prudential Group, one of the nation's largest life insurance companies, has reached a settlement with 19 states that will change the way the insurer uses public death records.

As part of the agreement, Prudential has agreed to better cross-reference its database of policies with public death records. The settlement comes after state insurance commissioners raised questions about how the industry tracks policyholders and contacts beneficiaries.

A 2008 audit conducted by the state of Massachusetts found some insurers were failing to pay death benefits in a timely manner.

In other cases, if the beneficiary was unaware of the policy's existence, no benefits would be paid out. Some insurers would tap into the cash value of a universal or whole life policy to pay premiums. Once the cash value was depleted, the policy would then be canceled.

As a result of the settlement with Prudential, Massachusetts Treasurer Steven Grossman says tens of millions of dollars may be mailed to beneficiaries in Massachusetts and other states.

Social media usage on the rise

In other news, industry group LIMRA reports more life insurance companies are tapping into social media to connect with consumers and increase brand awareness.

Nearly 80 percent of insurers are currently using social media platforms, a 30 percent increase from the previous year, according to a LIMRA study. Another 18 percent expect to create a presence on social media sites in the next 12 months.

"Obviously, social media is changing the way we all communicate. Life insurers are no exception," said Todd Silverhart, corporate vice president of LIMRA markets and technology research, in a press statement. "Those companies not on board may be passed over by consumers and find themselves at a competitive disadvantage."

According to the study, companies most engaged in social media platforms use a team approach that combines marketing, IT, human resources and customer service features.

While this method allows for an improved consumer experience and greater opportunities to promote awareness of term life and whole life options, it also requires a significant time investment from employees. Almost half of life insurance companies say a lack of human resources is a primary challenge for their business, according to LIMRA.

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