Welcome to Moyer & Osibodu
Unclaimed Property Consulting
In recent months there have been news stories focusing on MetLife's unclaimed property settlement. In this day and age, there should be no reason why insurance providers or businesses should fall into the same situation.
Why risk your company, your name and your reputation when there are services and professionals that will work for you to avoid threatening audits and vast settlement amounts? Arm yourself with the five essential lessons every company should know in our Lessons Learned section below. Unclaimed property is an intricate subject that every company should understand its logistics. If you are asking yourself, "What exactly is unclaimed property? Does my company have unclaimed property? How can we prevent an audit?", then it is time to contact a consultant to review your individual circumstances and alleviate a "MetLife situation".
Some of the answers to your questions are on our website www.moyerosibodu.com. If you still have inquiries, please contact us for a consultation.
In The News
1% Is All It Takes
Metropolitan Life Insurance (MetLife) Company could approach a $700 million settlement in unclaimed property due to claims from the sale of industrial life insurance policies from the early 1900s to 1964. These settlements were as a result of an investigation that began in 2009 which uncovered an unbalanced use of the Social Security Administration's Death Master List.
MetLife allegedly had been utilizing the Death Master File to check if policy holders had passed away only if it was beneficial to MetLife. Meaning, the Master File was used to stop annuity payments to deceased clients, but did not use it for life insurance payments to beneficiaries of the insured, according to a Miami Herald report. In a MetLife statement, records indicate over 99% of life insurance claims "are submitted by beneficiaries and routinely paid in a timely and accurate manner." But it was the 1% that they did not pay in a timely fashion which resulted in close to a $700 million settlement, including penalties and fines.
In response to the MetLife's unclaimed property lawsuit, Moyer & Osibodu has written a "Letter to the Editor" which is making its rounds in print and online, including the Dallas Herald, TBO.com, The Lakeland Ledger and even on the Colodny, Fass, Talenfeld, Karlinsky & Abate Document Library (online blog).
In the Letter, it warns that it only takes that 1% of delayed payment that is receiving the attention and tarnishing the reputation of MetLife and other large insurance companies. Other companies can learn from this incident because this is what could happen if you don't comply. As the old adage goes, "an ounce of prevention is worth a pound of cure."
Take Your Stake
Fact or Theory?
In 2011, cash-strapped California stepped-up efforts to verify that insurance companies paid beneficiaries' unclaimed life insurance. Déjà vu in 2012, although in this case, some theorize the struggling state of California was aggressively pursuing insurance companies not so much because they wanted beneficiaries to receive what was rightfully theirs, but in the event they did not come forth to collect those funds, the state has use of that money interest-free.
With a third of a state's unclaimed property never reaching its owner, who has the right to the claims? California Controller John Chiang lead the audit of 21 insurance companies. He was quoted, "an industry-wide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies." In February 2011, he announced a multi-million dollar settlement with insurer John Hancock. This was the first settlement with an insurer and the settlements with other insurance providers keep coming in 2012.
|Lessons Learned |
The Top 5
Here are the top 5 things that companies can learn from this unfortunate situation:
- Do not assume that your company is in compliance with the states' unclaimed property laws.
- Engage an independent consultant to review policies and procedures for potential compliance gaps.
- Perform a risk assessment to identify potential areas of non-compliance or exposure.
- Make sure to stay on top of changes in the states' unclaimed property laws.
- Comply with the states' unclaimed property laws, including the annual reporting of unclaimed property.
|Compliance or Audit Risk? |
Are you prepared for the October 31, 2012 deadline to file your state unclaimed property reports? This is a good time to determine if your company owes outstanding checks to vendors, money to former employees or outstanding credit balances and refunds to customers.
If you are unsure where to begin this quest, you may want to consider hiring a third party unclaimed property service provider to assist by cutting-through all the paperwork, simplifying procedures and performing your due diligence in order to significantly reduce the risk of an audit. More and more often, companies choose to overlook accounting mistakes that could cost them millions of dollars rather than to hire experienced professionals that may save them significant money.
|Achieving Success |
With a combined 50 years of experience in unclaimed property compliance policies, procedures, risk assessment and annual compliance reporting, Moyer & Osibodu has had opportunities to work with a multitude of well-established companies. We'll let our successes speak for themselves...
A client received audit notices from 15 States that had engaged a third-party contingency fee auditor. The client determined that they did not have the expertise in the area of unclaimed property to handle the audit in house and engaged Moyer & Osibodu to manage the audit on their behalf. Based on Moyer & Osibodu's expertise and knowledge of the auditor's document requests and review procedures, the initial audit assessment of $25 million was reduced to $7 million.
About Moyer & Osibodu
Moyer & Osibodu offer unclaimed property consulting and compliance services to ensure that clients are in compliance with the various States' Unclaimed Property Laws and Regulations. With over 50 years of collective experience gained from industry, public accounting and state, the team is well equipped to solve any unclaimed property compliance issue, as well as provide companies with cost-saving services.
Photo Credit: FreeDigitalPhotos.net
Kathleen H. Moyer
Managing Partner Compliance Services
Josiah S. Osibodu, CPA